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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of report (Date of earliest event reported):
July 19, 2024
CANOO INC.
(Exact name of registrant as specified in its
charter)
Delaware
(State
or Other Jurisdiction
of Incorporation) |
001-38824
(Commission
File Number) |
82-1476189
(I.R.S. Employer Identification Number) |
19951 Mariner Avenue
Torrance,
California |
90503 |
(Address of principal executive offices) |
(Zip Code) |
(424) 271-2144
(Registrant’s telephone number,
including area code)
N/A
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b)
of the Act:
Title of each
class |
|
Trading
symbol(s) |
|
Name of each
exchange
on which registered |
Common Stock, $0.0001 par value per share |
|
GOEV |
|
The Nasdaq Capital Market |
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Warrants to purchase shares of Common Stock |
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GOEVW |
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The Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. ¨
Item 1.01 |
Entry into a Material Definitive Agreement. |
Prepaid Advance Agreement
On July 19, 2024 (the “Effective
Date”), Canoo Inc. (the “Company”) entered into a Prepaid Advance Agreement
(the “PPA”) with YA II PN, Ltd., a Cayman Islands exempt limited company (“Yorkville”). In
accordance with the terms of the PPA, the Company may request advances of up to $15,000,000 in cash from Yorkville (or such greater amount
that the parties may mutually agree) (each, a “Prepaid Advance”), including an initial Prepaid Advance of $15,000,000
(the “Initial Advance”) requested by the Company in connection with entering the PPA and from time to time thereafter,
with an aggregate limitation on the Prepaid Advances of $100,000,000 over the course of 24 months from the Effective Date. A Prepaid
Advance will be offset upon the issuance of shares of the Company’s common stock (“Common Stock”) to Yorkville,
from time to time upon written notice from Yorkville (each, a “Purchase Notice”).
The Initial Advance will be offset upon the issuances
of shares of Common Stock at an initial Purchase Price (as such term is used in the PPA) equal to $2.70 per share.
On any date that is the 60th day after
the Effective Date, the Purchase Price on any remaining amount of the Initial Advance then outstanding at such time will be the lower
of (i) $2.70 per share and (ii) 95% of the lowest daily volume weighted average price (“VWAP”) of the Common
Stock on The Nasdaq Capital Market (“Nasdaq”) during five trading days immediately preceding the date on which Yorkville
provides the Purchase Notice to the Company (the “Variable Price”); however, in no event shall the Purchase Price be
less than $1.00 per share (the “Floor Price”).
With respect to a Prepaid Advance other than the
Initial Advance, such Prepaid Advance will be offset upon the issuances of shares of Common Stock at a Purchase Price equal to the lower
of (i) 120% of the daily VWAP of the Common Stock on Nasdaq as of the trading day immediately prior to the date of the disbursement
of such Prepaid Advance and (ii) the Variable Price; however, in no event shall the Purchase Price be less than the Floor Price.
After giving effect to the commitment fee and
the purchase price discount provided for in the PPA, net proceeds of the Initial Advance to the Company will be approximately $14.1 million.
The issuance of Common Stock under the PPA is subject to certain limitations, including, among others, that the aggregate number of shares
of Common Stock issued pursuant to the PPA cannot exceed 19.99% of the Company’s outstanding Common Stock as of June 13, 2024
(the “Exchange Cap”) unless the Company’s stockholders have approved issuances in excess of the Exchange Cap.
Pursuant to the terms of the PPA, interest accrues on the outstanding balance of a Prepaid Advance at an annual rate equal to 5%, subject
to an increase to 15% upon events of default described in the PPA.
Pursuant to the PPA,
the Company shall, among other things, (i) maintain its shelf registration statement on Form S-3 (the “Registration
Statement”), (ii) register the shares of Common Stock that are to be offered and sold to Yorkville pursuant to the PPA,
(iii) use the net proceeds for purposes disclosed in the respective prospectus supplement, and (iv) except as permitted under
the PPA, not enter into any variable rate transactions. The shares of Common Stock to be issued under the PPA will be issued pursuant
to the Registration Statement (File No. 333-264842). Promptly after the filing of this Current Report on Form 8-K, the Company
is filing a prospectus supplement with the U.S. Securities and Exchange Commission in connection with the offer and sale of the shares
of Common Stock.
The foregoing description of the PPA is qualified
in its entirety by reference to the PPA, which is filed hereto as Exhibit 10.1 and which is incorporated herein by reference.
Attached to this Current
Report on Form 8-K as Exhibit 5.1, is the opinion of Kirkland & Ellis LLP relating to the legality of the shares of
Common Stock.
Warrant Agreement
On the Effective Date, in connection with the
Initial Advance, the Company issued to Yorkville a warrant to purchase approximately 2.7 million shares
of Common Stock each at an exercise price of $2.70 per share, exercisable beginning on January 19, 2025 and with an expiration date
of July 19, 2029 (the “Warrants”). The Warrants include customary adjustment provisions for stock splits, combinations
and similar events.
The foregoing
description of the Warrants is qualified in its entirety by reference to the Warrants, which is filed hereto as Exhibit 4.1
and which is incorporated herein by reference.
Item 3.02 |
Unregistered Sales of Equity Securities. |
The information contained
in Item 1.01 is incorporated herein by reference. The issuance of the Warrants is exempt from registration pursuant to Section 4(a)(2) of
the Securities Act of 1933, as amended (the “Securities Act”). Yorkville represented to the Company that it is an “accredited
investor” as defined in Rule 501 of the Securities Act and that the Warrants are being acquired for investment purposes
and not with a view to, or for sale in connection with, any distribution thereof.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
The following exhibits are filed herewith:
Forward-Looking Statements
This report contains forward-looking statements,
and any statements other than statements of historical fact could be deemed to be forward-looking statements. These forward-looking statements
include, among other things, statements regarding the amount of shares of Common Stock the Company may issue to Yorkville pursuant to
the PPA, the amount of proceeds to be received by the Company from the sale of shares of common stock and the uses thereof and related
matters. These statements are subject to risks and uncertainties, and actual results may differ materially from these statements. You
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. The Company
undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: July 22, 2024 |
CANOO INC. |
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By: |
/s/ Hector Ruiz |
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Name: |
Hector Ruiz |
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Title: |
General Counsel and Corporate Secretary |
Exhibit 5.1
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333 West Wolf Point Plaza
Chicago, IL 60654
United States
+1 312 862 2000
www.kirkland.com |
Facsimile:
+1 312 862 2200 |
July 22, 2024
Canoo Inc.
19951 Mariner Avenue
Torrance, California 9050
Re: Registration Statement of Canoo Inc. on
Form S-3
Ladies and Gentlemen:
We are acting as special counsel
to Canoo Inc., a Delaware corporation (the “Company”), in connection with the registration by the Company of the offer and
sale of up to $100,000,000 of its common stock, par value $0.0001 per share (the “Common Stock”), consisting of up to 100,000,000
shares (the “Shares”) pursuant to the terms of the Pre-Paid Advance Agreement, dated July 19, 2024 between the Company
and YA II PN, Ltd. (as the same may be amended or supplemented from time to time, the “Agreement”). The Shares are being
offered and sold pursuant to a Registration Statement on Form S-3 (Registration No. 333-266666) filed by the Company with the
Securities and Exchange Commission (the “Commission”) on August 8, 2022 under the Securities Act of 1933, as amended
(the “Act”) (such Registration Statement, as amended or supplemented, is hereinafter referred to as the “Registration
Statement”), including a base prospectus dated August 18, 2022 (the “Base Prospectus”). The Base Prospectus, together
with any prospectus supplements filed describing the terms of the offering of Shares in accordance with the Agreement are referred to
herein as the “Prospectus.”
In that connection, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed
necessary for the purposes of this opinion, including (i) the corporate and organizational documents of the Company, including the
Second Amended and Restated Certificate of Incorporation of the Company, as amended through the date hereof, and the Amended and Restated
Bylaws of the Company; (ii) resolutions of the Board of Directors of the Company with respect to the issuance and sale of the Shares;
(iii) the Registration Statement and the exhibits thereto; and (iv) the Agreement.
For purposes of this opinion, we have assumed the
authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as copies
and the authenticity of the originals of all documents submitted to us as copies. We have also assumed the legal capacity of all natural
persons, the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority
of such persons signing on behalf of the parties thereto other than the Company and the due authorization, execution and delivery of all
documents by the parties thereto other than the Company. We relied upon statements and representations of officers and other representatives
of the Company and others as to factual matters.
Austin Bay Area Beijing Boston Brussels Chicago Dallas Hong Kong Houston London Los Angeles Miami Munich New York Paris Salt Lake City Shanghai Washington, D.C.
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Canoo Inc.
July 22, 2024
Page 2 |
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Based upon and subject to the foregoing qualifications,
assumptions and limitations and the further limitations set forth below, we are of the opinion that the Shares are duly authorized, and
when the Shares are registered by the Company’s transfer agent and delivered against payment of the agreed consideration therefor,
all in accordance with the Agreement, the Shares will be validly issued, fully paid and non-assessable.
Our opinion expressed above is subject to the qualifications
that we express no opinion as to the applicability of, compliance with, or effect of any laws except the General Corporation Law of the
State of Delaware (including the statutory provisions, all applicable provisions of the Delaware constitution and reported judicial decisions
interpreting the foregoing).
We hereby consent to the filing of this opinion with
the Commission as Exhibit 5.1 to the Company’s current report on Form 8-K. We also consent to the reference to our firm
under the heading “Legal Matters” in the Prospectus constituting part of the Registration Statement. In giving this consent,
we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Commission.
We do not find it necessary for the purposes of this
opinion, and accordingly we do not purport to cover herein, the application of the securities or “Blue Sky” laws of the various
states to the issuance and sale of the Shares and the Rights.
This opinion is limited to the specific issues addressed
herein, and no opinion may be inferred or implied beyond that expressly stated herein.
This opinion is furnished to you in connection with
the filing of the Prospectus and in accordance with the requirements of Item 601(b)(5) of Regulation S-K promulgated under the Act,
and is not to be used, circulated, quoted or otherwise relied upon for any other purpose.
|
Sincerely, |
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/s/ Kirkland & Ellis LLP |
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KIRKLAND & ELLIS LLP |
Exhibit 10.1
PREPAID ADVANCE AGREEMENT
THIS PREPAID ADVANCE AGREEMENT
(this “Agreement”) dated as of July 19, 2024 is made by and between YA II PN, LTD., a Cayman Islands
exempt limited company (the “Investor”), and CANOO INC., a company incorporated under the laws of the State
of Delaware (the “Company”). The Investor and the Company may be referred to herein individually as a “Party”
and collectively as the “Parties.”
WHEREAS, the parties
desire that, upon the terms and subject to the conditions contained herein, the Investor shall have the right to purchase from the Company,
from time to time as provided herein, and the Company shall issue and sell to the Investor, up to $100 million of the Company’s
shares of common stock, par value $0.0001 per share (the “Common Shares”); and
WHEREAS, the Common
Shares are listed for trading on the Nasdaq Stock Market under the symbol “GOEV;” and
WHEREAS, the offer
and sale of the Common Shares issuable hereunder will be registered on the Company’s registration statement on Form S-3 (file
No. 333-264842) under Section 5 under the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the “Securities Act”).
NOW, THEREFORE, the
parties hereto agree as follows:
Article I. Certain Definitions
Capitalized terms used in this Agreement shall
have the meanings ascribed to such terms in Annex I attached hereto, and hereby made a part hereof, or as otherwise set forth in
this Agreement.
Article II. Prepaid Advances
Section 2.01 Request
For Prepaid Advance. The parties hereby agree that at any time and from time to time during the Commitment Period, the Company may
request from the Investor, by providing a written notice to the Investor (a “Request”), and the Investor, in its sole
and exclusive discretion may agree to provide, advances (each, a “Prepaid Advance”) in an aggregate principal amount
not to exceed the Maximum Advance Amount. The closing of each Prepaid Advance (the “Closing”), if accepted by the Investor,
shall take place on or before the fifth business day following the date of such Request, or such earlier date as may be agreed by the
Parties (the date of the Closing of each Prepaid Advance shall be referred to as the “Pre-Advance Date”). On each Pre-Advance
Date, the Investor shall pay to the Company an amount equal to 99% of the amount
of the Prepaid Advance set forth in such Request in immediately available funds to an account designated by the Company in writing and
transmit notification to the Company that such funds transfer has been requested. The Parties agree that on the date hereof, the
Company Requests the first Prepaid Advance in the principal amount of $15 million, and the Investor agrees to provide such Prepaid Advance.
The Closing of the first Prepaid Advance shall take place on the date hereof. At each Closing, the Parties shall execute a closing statement
setting the net amount of the Prepaid Advance to be paid by the Investor and the wire transfer instructions of the Company for such payment.
Section 2.02 Issuance
of Warrants. At each Closing of a Prepaid Advance, the Company (upon agreement between the Company and Investor at such time) shall
issue to the Investor a warrant in the form attached hereto as Exhibit B (the “Warrant”) for the purchase
of up to such number of Common Shares determined by dividing one hundred percent of the principal amount of the Prepaid Advance by the
Fixed Price in respect of such Prepaid Advance, with an Exercise Price equal to the Fixed Price in respect of such Prepaid Advance.
Section 2.03 Conditions
Precedent to Each Prepaid Advance. In connection with each Request (including the initial Request for the first Prepaid Advance),
the Company shall provide a certificate executed by the Chief Executive Officer or the Chief Financial Officer of the Company certifying
that the Company has complied with all of the following conditions, which certification may be relied upon by the Investor as evidence
of satisfaction of such conditions without any obligation to independently verify.
| (a) | Accuracy of Company’s Representation and Warranties. The representations and warranties of
the Company set forth in Article V shall be true and correct in all material respects. |
| (b) | Performance by the Company. The Company shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company.
No Event of Default shall have occurred. |
| (c) | No Defaults. The Company shall not be in material default, or alleged to be in material default,
of any contractual obligations by any party. |
| (d) | No Variable Rate Transaction. Except for Variable Rate Transactions where the Company received
the Investor’s prior written consent, the Company shall not be party to any Variable Rate Transaction, except with respect to the
Investor. |
| (e) | No Material Adverse Effect. No Material Adverse Effect shall have occurred. |
| (f) | No Material Outside Event. No Material Outside Event shall have occurred and be continuing. |
| (g) | Registration of the Common Shares with the SEC. There is an effective Registration Statement pursuant
to which the Investor is permitted to utilize the prospectus thereunder to sell Common Shares issuable pursuant to Purchase Notices and
the market value of the Common Shares available thereunder (based on the average of the daily VWAP during the five Trading Days prior
to the date of the Request) shall be equal to the amount of the Prepaid Advance. |
| (h) | Authority. The delivery of the Request for such Prepaid Advance, and the performance by the Company
hereunder, including, without limitation, the payment obligations, is legally permitted by all laws and regulations to which the Company
is subject, is authorized by the Company’s Board of Directors and is not in conflict with, or prohibited by, the organizational
documents of the Company, or any contract, agreement, or arrangement with any third party. |
| (i) | No Suspension of Trading in or Delisting of Common Shares. The Common Shares are quoted for trading
on the Primary Market. The Company shall have the capacity to issue such number of Common Shares with a market value (based on the average
of the daily VWAP during the five Trading Days prior to the date of the Request) of no less than 1.5 times the principal amount of the
Prepaid Advance without breaching the Exchange Cap. The Company shall not have received any written notice that is then still pending
threatening the continued quotation of the Common Shares on the Primary Market. |
| (j) | No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or
directly, materially and adversely affects any of the transactions contemplated by this Agreement. |
Section 2.04 Company’s
Prepaid Advance Obligations.
| (a) | Interest. Interest shall accrue on the outstanding balance of any Prepaid Advance at an annual
rate of 5%, provided that for so long as any Event of Default has occurred and remains uncured, interest shall accrue on the outstanding
balance of any Prepaid Advance at an annual rate of 15%. Interest shall be calculated on the basis of a 365-day year and the actual number
of days elapsed, to the extent permitted by applicable law. |
| (b) | Maturity. The Company shall pay to the Investor an amount in cash representing any amount of a
Prepaid Advance that remains outstanding, plus accrued and unpaid interest thereon, on the 6-month anniversary of the Pre-Advance Date
of each Prepaid Advance (the “Maturity Date”). |
| (c) | Amortization Payment. If, any time after the Pre-Advance Date in respect of any Prepaid Advance,
and from time to time thereafter, an Amortization Event has occurred, then the Company shall make monthly repayments of amounts outstanding
under such Prepaid Advance beginning on the 10th calendar day after the Amortization Event Date and continuing on the same
day of each successive calendar month until the entire amount of such Prepaid Advance balance shall have been repaid. Each monthly payment
shall be in an amount equal to the sum of (i) Amortization Principal Amount as of such payment date, plus (ii) the Payment Premium
in respect of such Amortization Principal Amount, and (iii) accrued and unpaid interest in respect of such amount as of each payment
date. The obligation of the Company to make monthly payments related to a Amortization Event shall cease (with respect to any payment
that has not yet come due) if any time after the Amortization Event Date (A) in the event of a Floor Price Event, the daily VWAP
is greater than 110% of the Floor Price then in effect for five (5) consecutive Trading Days, (B) in the event of an Exchange
Cap Event, the Company obtains stockholder approval to increase the number of Common Shares under the Exchange Cap, or (C) in the
event of a Registration Event, the condition or event causing the Registration Event is cured, unless a subsequent Amortization Event
occurs. Any reductions to the Prepaid Advance amount made pursuant to Purchase Notices delivered after the occurrence of an Amortization
Event shall have the effect of reducing the amount of the next payment coming due as a result of such Amortization Event by an amount
equal to the amount of the Prepaid Advance that is offset against principal in respect of such Purchase Notice. |
| (d) | Early Repayment. The Company at its option shall have the right, but not the obligation, to repay
(“Optional Repayment”) early a portion or all amounts outstanding under a Prepaid Advance as described in this Section;
provided that (i) at the time of notice, the VWAP of the Common Stock is less than the Fixed Price during a period of three
(3) consecutive Trading Days immediately prior to such notice and (ii) the Company provides the Investor with at least 10 Trading
Days’ prior written (each, a “Repayment Notice”) of its desire to exercise an Optional Repayment. Each Repayment
Notice shall be irrevocable and shall specify the outstanding balance of the Prepaid Advance to be repaid. The “Repayment Amount”
shall be equal to the outstanding principal balance being repaid by the Company, plus the Payment Premium, plus all accrued and unpaid
interest in respect of such principal amount. On the 11th Trading Day after the Repayment Notice, the Company shall deliver
to the Investor the Repayment Amount in cash with respect to the principal amount being repaid after giving effect to any Advances effected
during the applicable notice period. |
| (e) | Events of Default. An “Event of Default”, wherever used herein, means any one
of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant
to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body) shall
have occurred and be continuing: |
| (i) | the Company’s failure to pay to the Investor any amount of the Prepaid Advances or other amounts
when and as due and payable hereunder and such failure is not cured within 5 days following the Investor’s written notice to such
effect; |
| (ii) | the Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company
or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto,
or the Company or any subsidiary of the Company commences, or there shall be commenced against the Company or any subsidiary of the Company,
any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company, in each
case which remains un-dismissed for a period of 61 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt
pursuant to a final, non-appealable order; or any order of relief or other order approving any such case or proceeding is entered; or
the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like
for it or any substantial part of its property which continues un-discharged or un-stayed for a period of 61 days; or the Company or any
subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company shall
admit in writing that it is unable to pay its debts generally as they become due; or the Company or any subsidiary of the Company shall
call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or any corporate or
other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing; |
| (iii) | the Company is a party to any agreement memorializing (1) the consummation of any transaction or
event (whether by means of a share exchange or tender offer applicable to the ordinary shares, a liquidation, consolidation, recapitalization,
reclassification, combination or merger of the Company or a sale, lease or other transfer of all or substantially all of the consolidated
assets of the Company) or a series of related transactions or events pursuant to which all of the outstanding ordinary shares of the Company
are exchanged for, converted into or constitute solely the right to receive, cash, securities or other property, (2) a consolidation
or merger in which the Company is not the surviving corporation, or (3) a sale, assignment, transfer, conveyance or other disposal
of all or substantially all of the properties or assets of the Company to another person or entity not affiliated with or under the control
of the Company (each of (1), (2) and (3) a “Change in Control”) unless in connection with such Change in
Control, the outstanding balance of all Prepaid Advances hereunder, and any other amounts owed will be paid in full or the Investor consents
to such Change in Control; |
| (iv) | the Company's (A) failure to deliver the required number of Common Shares to the Investor (I) before
the applicable Share Delivery Date, or (II) in the instance of a delay due to extenuating circumstances not attributable to the Company,
no later than the end of the Business Day immediately following the Share Delivery Date, or (B) notice, written or oral, to the Investor,
including by way of public announcement, at any time, of its intention not to comply with a Purchase Notice; |
| (v) | The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined
herein) within five (5) Business Days after such payment is due; |
| (vi) | the Company or any subsidiary of the Company shall default in any of its obligations under any debenture
or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may
be issued, or whether or not secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring
arrangement of the Company or any subsidiary of the Company in an amount exceeding $5,000,000, whether such indebtedness now exists or
shall hereafter be created and such default is not cured within five (5) Business Days; |
| (vii) | The Company’s failure to timely file with the SEC any Periodic Report on or before the due date
of such filing as established by the SEC, it being understood, for the avoidance of doubt, that due date includes any permitted filing
deadline extension under Rule 12b-25 under the Exchange Act |
| (viii) | the Common Shares shall cease to be quoted or listed for trading, fail to have a bid price or VWAP, or
fail to maintain a trading market on any Primary Market or otherwise have been suspended or delisted by the SEC, the Nasdaq, or FINRA; |
| (ix) | an Event of Default or material breach by the Company under any of the Prior PPA Agreements; or |
| (x) | The Company shall fail to observe or perform any material covenant, agreement or warranty contained in,
or otherwise commit any material breach or default of any provision of this Agreement (except as may be covered by Section 2.04(e)(i) through
Section 2.04(e)(ix) hereof) or any other Transaction Document) which is not cured or remedied within the time prescribed or
if no time is prescribed within ten (10) Business Days. |
During the time that any portion of
one or more Prepaid Advances are outstanding, if any Event of Default has occurred, the full amount outstanding under the Prepaid Advances
and the Payment Premium, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become at
the Investor's election given by notice pursuant to Article XI, immediately due and payable in cash. Furthermore, in addition to
any other remedies, the Investor shall have the right (but not the obligation) to submit Purchase Notices (and Advances hereunder) (subject
to the limitations set out in Section 3.01(b) at any time after (x) an Event of Default or (y) the Maturity Date at
the Purchase Price. The Investor need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of
any kind (other than required notice of purchase) and the Investor may immediately enforce any and all of its rights and remedies hereunder
and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Investor at any time prior
to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.
Article III. Investor’s Advances
Section 3.01 Advances;
Mechanics. Upon the terms and subject to the conditions of this Agreement, for so long as any Prepaid Advance is outstanding, the
Investor, at its sole discretion, shall have the right, but not the obligation, to purchase from the Company, and the Company shall issue
and sell to the Investor, Common Shares by the delivery to the Company of Purchase Notices as provided herein.
| (a) | Purchase Notice. At any time there is an outstanding balance under a Prepaid Advance, the Investor
may, by providing written notice to the Company in the form set forth herein as Exhibit A attached hereto (a “Purchase Notice”)
require the Company to issue and sell Shares to the Investor, in accordance with the following provisions: |
| (i) | The Investor shall, in each Purchase Notice, select the amount of the Advance, in its sole discretion,
and the timing of delivery; provided that the amount of the Advance shall not exceed the outstanding balance owed under all Prepaid
Advances on the date of delivery of the Purchase Notice or result in the Investor exceeding the Advance Limitations set forth in Section 3.01(b) hereof. |
| (ii) | Each Purchase Notice shall be delivered in accordance with the instructions set forth at the bottom of
Exhibit A. |
| (iii) | Each Purchase Notice shall set forth the amount of the Advance requested, the number of Shares to be issued
by the Company and purchased by the Investor, the Purchase Price (along with a report by Bloomberg, L.P. indicating the relevant VWAP
used in calculating the Purchase Price), the aggregate amount of accrued and unpaid interest of the Prepaid Advance as of the Purchase
Notice Date that shall be offset by the issuance of Shares, the aggregate amount of the Prepaid Advance as of the Purchase Notice Date
that shall be offset by the issuance of Shares, and the total amount of the Prepaid Advance that shall be outstanding following the Closing
of the Advance. |
| (i) | Ownership Limitation. At the request of the Company, the Investor will inform the Company of the
amount of shares the Investor currently beneficially owns. In no event shall the number of Common Shares issuable to the Investor pursuant
to an Advance cause the aggregate number of Common Shares beneficially owned by the Investor and its affiliates (as calculated pursuant
to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by the Investor and its affiliates (on an aggregated
basis) to exceed 9.99% of the then outstanding voting power or number of Common Shares (the “Ownership Limitation”).
Upon the written request of the Investor, the Company shall promptly (but no later than the next business day on which the transfer agent
for the Common Shares is open for business) confirm orally or in writing to the Investor the number of Common Shares then outstanding. |
| (ii) | Exchange Limitation. Notwithstanding anything to the contrary herein, the Company shall not affect
any sales under this Agreement and the Investor shall not have the obligation to purchase Common Shares under this Agreement to the extent
(but only to the extent) that after giving effect to such purchase and sale the aggregate number of Common Shares issued under this Agreement
(or any other transaction that is integrated with this Agreement) would exceed 19.99% of the outstanding Common Shares as of June 13,
2024 (the “Exchange Cap”) provided that, the Exchange Cap will not apply if the Company’s stockholders
have approved issuances in excess of the Exchange Cap in accordance with the rules of the Principal Market. |
| (c) | Company’s Obligations to Deliver Common Shares to Investor. On or before the third (3rd)
Business Day following the date of receipt of a Purchase Notice (the “Share Delivery Date”), the Company shall (X) if
legends are not required to be placed on certificates of Common Stock and provided that the Transfer Agent is participating in The Depository
Trust Company's (“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common
Stock to which the Investor shall be entitled to the Investor's or its designee's balance account with DTC through its Deposit/Withdrawal
at Custodian (DWAC) system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program,
issue and deliver to the address as specified in the Purchase Notice, a certificate, registered in the name of the Investor or its designee,
for the number of shares of Common Stock to which the Investor shall be entitled which certificates shall not bear any restrictive legends
unless required pursuant to rules and regulations of the SEC. The aggregate purchase price of the Common Shares issued shall be paid
by offsetting an equal amount outstanding under the Prepaid Advance (first towards accrued and unpaid interest, if any, and then towards
outstanding principal as shown in such Purchase Notice). No fractional shares shall be issued, and any fractional amounts shall be rounded
to the nearest whole number of shares. The Person or Persons entitled to receive the shares of Common Stock issuable hereunder shall be
treated for all purposes as the record Investor or holders of such shares of Common Stock upon the transmission of a Purchase Notice. |
| (d) | Company's Failure to Timely Delivery Shares. If within three (3) Trading Days after the Company's
receipt of a copy of a Purchase Notice the Company shall fail to issue and deliver a certificate to the Investor or credit the Investor's
balance account with DTC for the number of shares of Common Stock to which the Investor is entitled pursuant to such Purchase Notice (a
“Delivery Failure”), and if on or after such date the Investor purchases (in an open market transaction or otherwise)
Common Stock to deliver in satisfaction of any sale made by the Investor in reliance on the Purchase Notice and the timely delivery of
Shares thereunder (such purchase, a “Buy-In”, provided that the number of shares purchased shall not exceed the number
of shares specified in the applicable Purchase Notice), then the Company shall, within three (3) Business Days after the Investor's
request and in the Investor's discretion, either (i) pay cash to the Investor in an amount equal to the Investor's total purchase
price (including brokerage commissions and other reasonable and documented out of pocket expenses, if any) for the shares of Common Stock
so purchased (the “Buy-In Price”), at which point the Company's obligation to deliver such certificate (and to issue
such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Investor a certificate or certificates
representing such Common Stock and pay cash to the Investor in an amount equal to the excess (if any) of the Buy-In Price over the product
of (A) such number of shares of Common Stock, times (B) the Nasdaq Official Closing Price on the Purchase Notice Date. |
| (e) | Book-Entry. The Investor and the Company shall maintain records showing the outstanding balance
of the Prepaid Advances (as well as the number of shares issued pursuant to Purchase Notices). |
| (f) | Each of the Company and the Investor shall deliver to the other all documents, instruments and writings
expressly required to be delivered by either of them pursuant to this Agreement or the Prior PPA Agreements in order to implement and
effect the transactions contemplated herein. |
| (g) | Notwithstanding any other provision in this Agreement, the Company and the Investor acknowledge and agree
that upon the Investor’s delivery of a valid Purchase Notice the parties shall be deemed to have entered into an unconditional contract
binding on both parties for the purchase and sale of Shares pursuant to such Purchase Notice in accordance with the terms of this Agreement
and (i) subject to Applicable Laws and (ii) subject to Section 4.09 (Trading Activities), the Investor may sell such Shares. |
Section 3.02 Hardship.
In the event the Investor sells Common Shares of the Company after delivery of a Purchase Notice and the Company fails to perform its
obligations as mandated in Section 3.01(c), (d) and (e), the Company agrees that in addition to and in no way limiting the rights
and obligations set forth in Article VI hereto and in addition to any other remedy to which the Investor is entitled at law or in
equity, including, without limitation, specific performance, it will hold the Investor harmless against any loss, claim, damage, or expense
(including reasonable legal fees and expenses), as incurred, arising out of or in connection with such default by the Company and acknowledges
that irreparable damage may occur in the event of any such default. It is accordingly agreed that the Investor shall be entitled to an
injunction or injunctions to prevent such breaches of this Agreement and to specifically enforce (subject to the Securities Act and other
rules of the Principal Market), without the posting of a bond or other security, the terms and provisions of this Agreement.
Article IV. Representations and Warranties
of Investor
The Investor hereby makes
the following representations, warranties and covenants to the Company:
Section 4.01 Organization
and Authorization. The Investor is duly organized, validly existing and in good standing under the laws of the Cayman Islands and
has the requisite corporate power and authority to enter into and perform its obligations under this Agreement, including all transactions
contemplated, and to purchase or acquire Shares in accordance with the terms hereof. The decision to invest and the execution and delivery
of this Agreement by the Investor, the performance by the Investor of its obligations hereunder and the consummation by the Investor of
the transactions contemplated hereby have been duly authorized and require no other proceedings on the part of the Investor. The undersigned
has the right, power and authority to execute and deliver this Agreement and all other instruments on behalf of the Investor or its shareholders.
This Agreement has been duly executed and delivered by the Investor and, assuming the execution and delivery hereof and acceptance thereof
by the Company, will constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance
with its terms.
Section 4.02 Evaluation
of Risks. The Investor has such knowledge and experience in financial, tax and business matters as to be capable of evaluating the
merits and risks of, and bearing the economic risks entailed by, an investment in the Common Shares of the Company and of protecting its
interests in connection with the transactions contemplated hereby. The Investor acknowledges and agrees that its investment in the Company
involves a high degree of risk, and that the Investor may lose all or a part of its investment.
Section 4.03 No
Legal, Investment or Tax Advice from the Company. The Investor acknowledges that it had the opportunity to review this Agreement
and the transactions contemplated by this Agreement with its own legal counsel and investment and tax advisors. The Investor is relying
solely on such counsel and advisors and not on any statements or representations of the Company or any of the Company’s representatives
or agents for legal, tax, investment or other advice with respect to the Investor’s acquisition of Common Shares hereunder, the
transactions contemplated by this Agreement or the laws of any jurisdiction, and the Investor acknowledges that the Investor may lose
all or a part of its investment.
Section 4.04 Investment
Purpose. The Investor is acquiring the Common Shares for its own account, for investment purposes and not with a view towards, or
for resale in connection with, the public sale or distribution thereof, in violation of the Securities Act or any applicable state securities
laws; provided, however, that by making the representations herein, the Investor does not agree, or make any representation or warranty,
to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance
with, or pursuant to, a registration statement filed pursuant to this Agreement or an applicable exemption under the Securities Act. The
Investor does not presently have any agreement or understanding, directly or indirectly, with any Person to sell or distribute any of
the Shares. The Investor is acquiring the Shares hereunder in the ordinary course of its business.
Section 4.05 Accredited
Investor. The Investor is an “accredited investor” as that term is defined in Rule 501(a)(3) of Regulation
D.
Section 4.06 Information.
The Investor and its advisors (and its counsel), if any, have been furnished with all materials relating to the business, finances and
operations of the Company and information the Investor deemed material to making an informed investment decision. The Investor and its
advisors (and its counsel), if any, have been afforded the opportunity to ask questions of the Company and its management and have received
answers to such questions. Neither such inquiries nor any other due diligence investigations conducted by such Investor or its advisors
(and its counsel), if any, or its representatives shall modify, amend or affect the Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement. The Investor acknowledges and agrees that the Company has not made to the
Investor, and the Investor acknowledges and agrees it has not relied upon, any representations and warranties of the Company, its employees
or any third party other than the representations and warranties of the Company contained in this Agreement. The Investor understands
that its investment involves a high degree of risk. The Investor has sought such accounting, legal and tax advice, as it has considered
necessary to make an informed investment decision with respect to the transactions contemplated hereby.
Section 4.07 Not
an Affiliate. The Investor is not an officer, director or a person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with the Company or any “affiliate” of the Company (as that
term is defined in Rule 405 promulgated under the Securities Act).
Section 4.08 No
Prior Short Sales. At no time prior to the date of this Agreement has the Investor, its sole member, any of their respective officers,
or any entity managed or controlled by the Investor or its sole member, engaged in or effected, in any manner whatsoever, directly or
indirectly, for its own principal account, any (i) “short sale” (as such term is defined in Rule 200 of Regulation
SHO of the Exchange Act) of the Common Shares or (ii) hedging transaction, which establishes a net short position with respect to
the Common Shares that remains in effect as of the date of this Agreement.
Section 4.09 Trading
Activities. The Investor’s trading activities with respect to the Common Shares shall be in compliance with all applicable
federal and state securities laws, rules and regulations and the rules and regulations of the Principal Market. Neither the
Investor nor its affiliates has any open short position in the Common Shares, nor has the Investor entered into any hedging transaction
that establishes a net short position with respect to the Common Shares, and the Investor agrees that it shall not, and that it will
cause its affiliates not to, engage in any short sales or hedging transactions with respect to the Common Shares; provided that
the Company acknowledges and agrees that upon delivery of a Purchase Notice the Investor has the right to sell (a) the Shares to
be issued to the Investor pursuant to the Purchase Notice prior to receiving such Shares, or (b) other Common Shares sold by the
Company to Investor pursuant to this Agreement and which the Company has continuously held as a long position.
Section 4.10 General
Solicitation. Neither the Investor, nor any of its affiliates, nor any person acting on its or their behalf, has engaged or will
engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or
sale of the Common Shares by the Investor.
Article V. Representations and Warranties
of the Company
Except as set forth in the
SEC Documents, or in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation
or warranty otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules
or in another Section of the Disclosure Schedules, to the extent that it is reasonably apparent on the face of such disclosure that
such disclosure is applicable to such Section, the Company represents and warrants to the Investor that, as of the date hereof, each
Purchase Notice Date (other than representations and warranties which address matters only as of a certain date, which shall be true
and correct as written as of such certain date), that:
Section 5.01 Organization
and Qualification. Each of the Company and its Subsidiaries (as defined below) is an entity duly organized and validly existing under
the laws of their respective jurisdiction of organization, and has the requisite power and authority to own its properties and to carry
on its business as now being conducted. Each of the Company and its Subsidiaries is duly qualified to do business and is in good standing
(to the extent applicable) in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect.
Section 5.02 Authorization,
Enforcement, Compliance with Other Instruments. The Company has the requisite corporate power and authority to enter into and perform
its obligations under this Agreement, and the other Transaction Documents and to issue the Shares in accordance with the terms hereof
and thereof. The execution and delivery by the Company of this Agreement and the other Transaction Documents, and the consummation by
the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Shares) have
been or (with respect to consummation) will be duly authorized by the Company’s board of directors and no further consent or authorization
will be required by the Company, its board of directors or its shareholders. This Agreement, and the other Transaction Documents to which
it is a party have been (or, when executed and delivered, will be) duly executed and delivered by the Company and, assuming the execution
and delivery thereof and acceptance by the Investor, constitute (or, when duly executed and delivered, will be) the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may
be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or other laws
relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification
and to contribution may be limited by federal or state securities law.
Section 5.03 Authorization
of the Shares. The Shares to be issued under this Agreement have been, or with respect to Shares to be purchased by the Investor pursuant
to an Purchase Notice, will be, when issued and delivered pursuant to the terms approved by the board of directors of the Company or a
duly authorized committee thereof, or a duly authorized executive committee, against payment therefor as provided herein, duly and validly
authorized and issued and fully paid and nonassessable, free and clear of any pledge, lien, encumbrance, security interest or other claim,
including any statutory or contractual preemptive rights, resale rights, rights of first refusal or other similar rights. The Shares,
when issued, will conform to the description thereof set forth in or incorporated into the applicable Prospectus. As of each Pre-Advance
Date, and at all times thereafter, the Company shall have reserved from its duly authorized capital not less than the maximum number of
Shares issuable to the Investor under such Request (assuming for purposes hereof that (x) such Purchase Price is equal to the Purchase
Price as of the date of determination, and (y) any such limitations on the issuance of Shares is not applicable).
Section 5.04 No
Conflict. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Common Shares) will not (i) result
in a violation of the articles of incorporation or other organizational documents of the Company or its Subsidiaries (with respect to
consummation, as the same may be amended prior to the date on which any of the transactions contemplated hereby are consummated), (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or
its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) applicable to the Company or its Subsidiaries or by which any property or asset of the Company
or its Subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that
would not reasonably be expected to have a Material Adverse Effect.
Section 5.05 SEC
Documents; Financial Statements. The Company has timely filed (giving effect to permissible extensions in accordance with Rule 12b-25
under the Exchange Act) all SEC Documents. The Company has made available to the Investor through the SEC’s website at http://www.sec.gov,
true and complete copies of the SEC Documents. As of their respective dates (or, with respect to any filing that has been amended or superseded,
the date of such amendment or superseding filing), the SEC Documents complied in all material respects with the requirements of the Exchange
Act or the Securities Act, as applicable, and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
Section 5.06 Financial
Statements. The consolidated financial statements of the Company included or incorporated by reference in SEC Documents, together
with the related notes and schedules, present fairly, in all material respects, the consolidated financial position of the Company and
the Subsidiaries as of the dates indicated and the consolidated results of operations, cash flows and changes in stockholders’ equity
of the Company for the periods specified and have been prepared in compliance with the requirements of the Securities Act and Exchange
Act and in conformity with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent
basis (except for (i) such adjustments to accounting standards and practices as are noted therein, (ii) in the case of unaudited
interim financial statements, to the extent such financial statements may not include footnotes required by GAAP or may be condensed or
summary statements and (iii) such adjustments which will not be material, either individually or in the aggregate) during the periods
involved; the other financial and statistical data with respect to the Company and the Subsidiaries (as defined below) contained or incorporated
by reference in the SEC Documents are accurately and fairly presented and prepared on a basis consistent with the financial statements
and books and records of the Company; there are no financial statements (historical or pro forma) that are required to be included or
incorporated by reference in the SEC Documents that are not included or incorporated by reference as required; the Company and the Subsidiaries
(as defined below) do not have any material liabilities or obligations, direct or contingent (including any off-balance sheet obligations),
not described in the SEC Documents (excluding the exhibits thereto); and all disclosures contained or incorporated by reference in the
SEC Documents regarding “non-GAAP financial measures” (as such term is defined by the rules and regulations of the SEC)
comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation S-K under the Securities Act, to the extent
applicable. The interactive data in extensible Business Reporting Language included or incorporated by reference in the SEC Documents
fairly presents the information called for in all material respects and has been prepared in accordance with the SEC’s rules and
guidelines applicable thereto.
Section 5.07 Registration
Statement and Prospectus. The Company and the transactions contemplated by this Agreement relating to the public resale of Common
Stock by the Investor meet the requirements for and comply with the conditions for the use of Form S-3 under the Securities Act.
Each Registration Statement and the offer and sale of Shares as contemplated hereby, if and when filed, will meet the requirements of
Rule 415 under the Securities Act and shall comply in all material respects with said Rule. Any statutes, regulations, contracts
or other documents that are required to be described in a Registration Statement or a Prospectus, or to be filed as exhibits to a Registration
Statement have been (or will be upon filing of the applicable Registration Statement) so described or filed. Copies of each Registration
Statement, any Prospectus, and any such amendments or supplements thereto and all documents incorporated by reference therein that were
filed with the SEC on or prior to the date of this Agreement have been delivered, or are available through EDGAR, to the Investor and
its counsel. The Company has not distributed and, prior to the later to occur of each Settlement Date and completion of the distribution
of the Shares, will not distribute any offering material in connection with the offering or sale of the Shares other than a Registration
Statement and any Prospectus forming a part of such Registration Statement.
Section 5.08 No
Material Misstatement or Omission. Each Registration Statement, when it became or becomes effective, and any Prospectus, on the date
of such Prospectus or amendment or supplement, conformed and will conform in all material respects with the requirements of the Securities
Act. At each Purchase Notice Date, the Registration Statement, and any Prospectus, as of such date, will conform in all material respects
with the requirements of the Securities Act. Each Registration Statement, when it became or becomes effective, did not, and will not,
contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein not misleading. Each Prospectus did not, or will not, include an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The
documents incorporated by reference in a Prospectus or any Prospectus Supplement did not, and any further documents filed and incorporated
by reference therein will not, when filed with the SEC, contain an untrue statement of a material fact or omit to state a material fact
required to be stated in such document or necessary to make the statements in such document, in light of the circumstances under which
they were made, not misleading. The foregoing shall not apply to statements in, or omissions from, any such document made in reliance
upon, and in conformity with, information furnished to the Company by the Investor specifically for use in the preparation thereof.
Section 5.09 Conformity
with Securities Act and Exchange Act. Each Registration Statement, each Prospectus or any amendment or supplement thereto, and the
documents incorporated by reference in each Registration Statement, Prospectus or any amendment or supplement thereto, when such documents
were or are filed with the SEC under the Securities Act or the Exchange Act or became or become effective under the Securities Act, as
the case may be, conformed or will conform in all material respects with the requirements of the Securities Act and the Exchange Act,
as applicable.
Section 5.10 Equity
Capitalization. As of the date hereof, the authorized capital of the Company consists of 2,010,000,000 shares of capital stock, of
which 2,000,000,000 shares are designated Common Shares, and 10,000,000 shares are preferred stock. As of the date hereof, the Company
had 72,131,330 shares of Common Shares outstanding and 61,500 shares of preferred stock outstanding.
The Common Shares are registered
pursuant to Section 12(b) of the Exchange Act and is currently listed on the Principal Market under the trading symbol “GOEV.”
The Company has taken no action designed to, or reasonably likely to have the effect of, terminating the registration of the Common Shares
under the Exchange Act, delisting the Common Shares from the Principal Market, nor has the Company received any notification that the
SEC or the Principal Market is contemplating terminating such registration or listing. To the Company’s knowledge, it is in compliance
with all applicable listing requirements of the Principal Market.
Section 5.11 Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights, if any, necessary to conduct their respective businesses as now conducted, except
as would not cause a Material Adverse Effect. The Company and its Subsidiaries have not received written notice of any infringement by
the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service mark registrations, or trade secrets, except as would not cause a Material Adverse Effect. To the knowledge of
the Company, there is no material claim, action or proceeding being made or brought against, or to the Company’s knowledge, being
threatened against the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service mark registrations, trade secret or other infringement; and, except as would not cause a Material
Adverse Effect, the Company is not aware of any facts or circumstances which might give rise to any of the foregoing.
Section 5.12 Employee
Relations. Neither the Company nor any of its Subsidiaries is involved in any labor dispute nor, to the knowledge of the Company or
any of its Subsidiaries, is any such dispute threatened, in each case which is reasonably likely to cause a Material Adverse Effect.
Section 5.13 Environmental
Laws. The Company and its Subsidiaries (i) have not received written notice alleging any failure to comply in all material respects
with all Environmental Laws (as defined below), (ii) have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii) have not received written notice alleging any failure
to comply with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and
(iii), the failure to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The
term “Environmental Laws” means all applicable federal, state and local laws relating to pollution or protection of
human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants,
or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
Section 5.14 Title.
Except as would not cause a Material Adverse Effect, the Company (or its Subsidiaries) have indefeasible fee simple or leasehold title
to its properties and material assets owned by it, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable
interest other than such as are not material to the business of the Company. Any real property and facilities held under lease by the
Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.
Section 5.15 Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries
are engaged. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have
a Material Adverse Effect.
Section 5.16 Regulatory
Permits. Except as would not cause a Material Adverse Effect, the Company and its Subsidiaries possess all material certificates,
authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to own their respective
businesses, and neither the Company nor any such Subsidiary has received any written notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permits.
Section 5.17 Internal
Accounting Controls. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences, and management is not aware of any material weaknesses that are not disclosed in the
SEC Documents as and when required.
Section 5.18 Absence
of Litigation. Except as disclosed in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company, the Common
Shares or any of the Company’s Subsidiaries, wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect.
Section 5.19 Absence
of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in a Form 10-K,
there has been no Material Adverse Effect, nor any event or occurrence specifically affecting the Company or its Subsidiaries that would
be reasonably expected to result in a Material Adverse Effect. Since the date of the Company’s most recent audited financial statements
contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold
any material assets, individually or in the aggregate, outside of the ordinary course of business, or (iii) made any material capital
expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries
has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership,
liquidation or winding up, nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective
creditors intend to initiate involuntary bankruptcy proceedings.
Section 5.20 Tax
Status. Except as would not have a Material Adverse Effect, each of the Company and its Subsidiaries (i) has timely made or filed
all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has timely paid all taxes and other governmental assessments and charges that are material in amount, shown or determined
to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books
provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations
apply. Except as would not have a Material Adverse Effect, the Company has not received written notification any unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no
basis for any such claim where failure to pay would cause a Material Adverse Effect.
Section 5.21 Certain
Transactions. Except as disclosed in the SEC Documents or as not required to be disclosed pursuant to Applicable Laws, none of the
officers or directors of the Company is presently a party to any transaction with the Company (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments to or from any officer or director, or to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any officer or director has a substantial interest or is
an officer, director, trustee or partner.
Section 5.22 Rights
of First Refusal. The Company is not obligated to offer the Common Shares offered hereunder on a right of first refusal basis to any
third parties including, but not limited to, current or former shareholders of the Company, underwriters, brokers, agents or other third
parties.
Section 5.23 Dilution.
The Company is aware and acknowledges that issuance of Common Shares hereunder could cause dilution to existing shareholders and could
significantly increase the outstanding number of Common Shares.
Section 5.24 Acknowledgment
Regarding Investor’s Purchase of Shares. The Company acknowledges and agrees that the Investor is acting solely in the capacity
of an arm’s length investor with respect to this Agreement and the transactions contemplated hereunder. The Company further acknowledges
that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement
and the transactions contemplated hereunder and any advice given by the Investor or any of its representatives or agents in connection
with this Agreement and the transactions contemplated hereunder is merely incidental to the Investor’s purchase of the Shares hereunder.
The Company is aware and acknowledges that it may not be able to effect Advances under this Agreement if the Registration Statement is
not effective or if any issuances of Common Shares pursuant to any Advances would violate any rules of the Principal Market. The
Company acknowledged and agrees that it is capable of evaluating and understanding, and understands and accepts, the terms, risks and
conditions of the transactions contemplated by this Agreement.
Section 5.25 Finder’s
Fees. Neither the Company nor any of the Subsidiaries has incurred any liability for any finder’s fees, brokerage commissions
or similar payments in connection with the transactions herein contemplated.
Section 5.26 Relationship
of the Parties. Neither the Company, nor any of its subsidiaries, affiliates, nor any person acting on its or their behalf is a client
or customer of the Investor or any of its affiliates and neither the Investor nor any of its affiliates has provided, or will provide,
any services to the Company or any of its affiliates, its subsidiaries, or any person acting on its or their behalf. The Investor’s
relationship to Company is solely as investor as provided for in the Transaction Documents.
Section 5.27 Forward-Looking
Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act) contained in the Registration Statement or a Prospectus will be made or reaffirmed without a reasonable basis or will be
disclosed other than in good faith.
Section 5.28 Compliance
with Laws. The Company and each of its Subsidiaries are in compliance with Applicable Laws; the Company has not received a notice
of non-compliance, nor knows of, nor has reasonable grounds to know of, any facts that any director, officer, or employee of the Company
or any Subsidiary nor, to the Company’s knowledge, any agent, affiliate or other person acting on behalf of the Company or any Subsidiary,
has not complied with Applicable Laws, or could give rise to a notice of non-compliance with Applicable Laws, and is not aware of any
pending change or contemplated change to any applicable law or regulation or governmental position; in each case that would have a Material
Adverse Effect on the business of the Company or the business or legal environment under which the Company operates.
Section 5.29 Sanctions
Matters. Neither the Company nor any of its Subsidiaries or, to the knowledge of the Company, any director, officer or controlled
affiliate of the Company or any director or officer of any Subsidiary, is a Person that is, or is owned or controlled by a Person that
is (i) the subject of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Asset Control
(“OFAC”), the United Nations Security Council, the European Union, His Majesty’s Treasury, or other relevant
sanctions authorities, including, without limitation, designation on OFAC’s Specially Designated Nationals and Blocked Persons List
or OFAC’s Foreign Sanctions Evaders List or other relevant sanctions authority (collectively, “Sanctions”), or
(ii) located, organized or resident in a country or territory that is the subject of Sanctions that broadly prohibit dealings with
that country or territory (including, without limitation, the Crimea, Zaporizhzhia and Kherson regions of Ukrain, the Donetsk People’s
Republic and Luhansk People’s Republic in Ukraine, Cuba, Iran, North Korea, Russia, Sudan and Syria (the “Sanctioned
Countries”)). Neither the Company nor any of its Subsidiaries will, directly or indirectly, use the proceeds of any Prepaid
Advance, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (a) for
the purpose of funding or facilitating any activities or business of or with any Person or in any country or territory that, at the time
of such funding or facilitation, is the subject of Sanctions or is a Sanctioned Country, or (b) in any other manner that will result
in a violation of Sanctions or Applicable Laws by any Person (including any Person participating in the transactions contemplated by this
Agreement, whether as underwriter, advisor, investor or otherwise). For the past five years, neither the Company nor any of its Subsidiaries
has engaged in, and is now not engaged in, any dealings or transactions with any Person, or in any country or territory, that at the time
of the dealing or transaction is or was the subject of Sanctions or was a Sanctioned Country. Neither the Company nor any of its Subsidiaries
nor any director, officer or controlled affiliate of the Company or any of its Subsidiaries, has ever had funds blocked by a United States
bank or financial institution, temporarily or otherwise, as a result of OFAC concerns.
Article VI. Indemnification
The Investor and the Company
represent to the other the following with respect to itself:
Section 6.01 Indemnification
by the Company. In consideration of the Investor’s execution and delivery of this Agreement, and in addition to all of the Company’s
other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless the Investor and its investment
manager, Yorkville Advisors Global, LP, and each of their respective officers, directors, managers, members, partners, employees and agents
(including, without limitation, those retained in connection with the transactions contemplated by this Agreement) and each person who
controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively,
the “Investor Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and reasonable and documented expenses in connection therewith (irrespective of whether any such Investor
Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and
disbursements (the “Indemnified Liabilities”), incurred by the Investor Indemnitees or any of them as a result of,
or arising out of, or relating to (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Shares as originally filed or in any amendment thereof, or in any related prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the
Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of the Investor specifically for inclusion therein; (b) any material
misrepresentation or breach of any material representation or material warranty made by the Company in this Agreement or any other certificate,
instrument or document contemplated hereby or thereby; or (c) any material breach of any material covenant, material agreement or
material obligation of the Company contained in this Agreement or any other certificate, instrument or document contemplated hereby or
thereby. To the extent that the foregoing undertaking by the Company may be unenforceable under Applicable Law, the Company shall make
the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under Applicable
Law.
Section 6.02 Indemnification
by the Investor. In consideration of the Company’s execution and delivery of this Agreement, and in addition to all of the Investor’s
other obligations under this Agreement, the Investor shall defend, protect, indemnify and hold harmless the Company and all of its officers,
directors, shareholders, employees and agents (including, without limitation, those retained in connection with the transactions contemplated
by this Agreement) and each person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act (collectively, the “Company Indemnitees”) from and against any and all Indemnified Liabilities
incurred by the Company Indemnitees or any of them as a result of, or arising out of, or relating to (a) any untrue statement or
alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares as originally filed
or in any amendment thereof, or in any related prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Investor will only be liable for written information relating to the
Investor furnished to the Company by or on behalf of the Investor specifically for inclusion in the documents referred to in the foregoing
indemnity, and will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Investor by or on behalf of the Company specifically for inclusion therein; (b) any material
misrepresentation or breach of any material representation or material warranty made by the Investor in this Agreement or any instrument
or document contemplated hereby or thereby executed by the Investor; or (c) any material breach of any material covenant, agreement
or obligation of the Investor contained in this Agreement or any other certificate, instrument or document contemplated hereby or thereby
executed by the Investor. To the extent that the foregoing undertaking by the Investor may be unenforceable under Applicable Laws, the
Investor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible
under Applicable Laws.
Section 6.03 Notice
of Claim. Promptly after receipt by an Investor Indemnitee or Company Indemnitee of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving an Indemnified Liability, such Investor Indemnitee or Company Indemnitee,
as applicable, shall, if a claim for an Indemnified Liability in respect thereof is to be made against any indemnifying party under this
Article VI, deliver to the indemnifying party a written notice of the commencement thereof; but the failure to so notify the indemnifying
party will not relieve it of liability under this Article VI except to the extent the indemnifying party is prejudiced by such failure.
The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually reasonably satisfactory to
the indemnifying party and the Investor Indemnitee or Company Indemnitee, as the case may be; provided, however, that an Investor Indemnitee
or Company Indemnitee shall have the right to retain its own counsel with the actual and reasonable third party fees and expenses of
not more than one counsel for such Investor Indemnitee or Company Indemnitee to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the representation by such counsel of the Investor Indemnitee or Company Indemnitee
and the indemnifying party would be inappropriate due to actual or potential differing interests between such Investor Indemnitee or
Company Indemnitee and any other party represented by such counsel in such proceeding. The Investor Indemnitee or Company Indemnitee
shall cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying
party and shall furnish to the indemnifying party all information reasonably available to the Investor Indemnitee or Company Indemnitee
which relates to such action or claim. The indemnifying party shall keep the Investor Indemnitee or Company Indemnitee reasonably apprised
as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement
of any action, claim or proceeding effected without its prior written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Investor
Indemnitee or Company Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such Investor Indemnitee or Company Indemnitee of a release
from all liability in respect to such claim or litigation. Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Investor Indemnitee or Company Indemnitee with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The indemnification required by this Article VI shall be made by
periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received and payment
therefor is due.
Section 6.04 Remedies.
The remedies provided for in this Article VI are not exclusive and shall not limit any right or remedy which may be available to
any indemnified person at law or equity. The obligations of the parties to indemnify or make contribution under this Article VI
shall survive expiration or termination of this Agreement for a period of three years. Notwithstanding anything to the contrary under
this Agreement or Applicable Laws, no party shall be entitled to any indemnification pursuant to this Article VI (other than claims
for any damages resulting from fraud) until the aggregate amount of all such damages that would otherwise be indemnifiable to such party
equals or exceeds $25,000 (the “Basket”), at which time such party shall be entitled to indemnification for the full
amount of all damages (including all damages incurred prior to exceeding the Basket).
Section 6.05 Limitation
of liability. Notwithstanding the foregoing, no party shall be entitled to recover from the other party for punitive, indirect, incidental
or consequential damages.
Article VII.
Additional Covenants
The Company covenants with the Investor, and the
Investor covenants with the Company, as follows, which covenants of one party are for the benefit of the other party, during the Commitment
Period (and with respect to the Company, for the period following the termination of this Agreement specified in Article X pursuant
to and in accordance with Article X:
Section 7.01 Registration
Statement.
| (a) | The Registration Statement. The
Company has filed, in accordance with the provisions of the Securities Act and the rules and
regulations thereunder, with the SEC a shelf registration statement on Form S-3 (File
Number 333-264842) (the “Initial Registration Statement”) including a
base prospectus, with respect to the issuance and sale of securities by the Company, including
Common Shares, which contains, among other things a Plan of Distribution section disclosing
the methods by which the Company may sell the Common Shares. The Initial Registration Statement
was declared effective on May 18, 2022 and remains in effect on the date hereof. Except
where the context otherwise requires, the Initial Registration Statement, as amended when
it became effective, including all documents filed as part thereof or incorporated by reference
therein, and including any information contained in a Prospectus subsequently filed with
the SEC pursuant to Rule 424(b) under the Securities Act or deemed to be a part
of the Initial Registration Statement pursuant to Rule 430B of the Securities Act, is
herein called the “Registration Statement.” |
| (b) | Initial Disclosure. Promptly
after the date hereof (and prior to, or simultaneously with the Company delivering a Request
to the Investor hereunder), the Company shall file with the SEC a report on Form 8-K
or such other appropriate form as determined by counsel to the Company, relating to the transactions
contemplated by this Agreement and a preliminary Prospectus Supplement pursuant to Rule 424(b) of
the Securities Act disclosing all information relating to the transaction contemplated hereby
required to be disclosed therein and an updated Plan of Distribution, including, without
limitation, the name of the Investor, the number of Shares being offered hereunder, the terms
of the offering, the purchase price of the Shares, and other material terms of the offering,
and any other information or disclosure necessary to register the transactions contemplated
herein (collectively, the “Initial Disclosure”) and shall provide the
Investor with 24 hours to review the Initial Disclosure prior to its filing. Promptly, and
in any event no later than two days after each Purchase Notice Date, the Company shall file
with the SEC a Prospectus Supplement pursuant to Rule 424(b) of the Securities
Act disclosing all information relating to the particular Advance to be disclosed therein,
including, without limitation, the number of Shares offered and the purchase price of the
Shares, and other material terms of the particular offering, and any other information or
disclosure necessary to register the Shares issued pursuant to such Advance. |
| (c) | Maintaining a Registration Statement.
The Company shall use commercially reasonable efforts to maintain the effectiveness of any
Registration Statement with respect to the Shares at all times there are outstanding Prepaid
Advances. Notwithstanding anything to the contrary contained in this Agreement, the Company
shall ensure that, when filed, each Registration Statement (including, without limitation,
all amendments and supplements thereto) and the prospectus (including, without limitation,
all amendments and supplements thereto) used in connection with such Registration Statement
shall not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not misleading. |
| (d) | Filing Procedures. Not less than
one business day prior to the filing of a Registration Statement and not less than one business
day prior to the filing of any related amendments and supplements to any Registration Statement
(except for any amendments or supplements caused by the filing of any annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and any similar or
successor reports), the Company shall furnish to the Investor copies of all such documents
proposed to be filed, which documents (other than those filed pursuant to Rule 424 promulgated
under the Securities Act) will be subject to the reasonable and prompt review of the Investor
(in each of which cases, if such document contains material non-public information as consented
to by the Investor pursuant to Section 7.18, the information provided to Investor will
be kept strictly confidential until filed and treated as subject to Section 7.07). The
Investor shall furnish comments on a Registration Statement and any related amendment and
supplement to a Registration Statement to the Company within 24 hours of the receipt thereof.
If the Investor fails to provide comments to the Company within such 24-hour period, then
the Registration Statement, related amendment or related supplement, as applicable, shall
be deemed accepted by the Investor in the form originally delivered by the Company to the
Investor. |
| (e) | Delivery of Final Documents.
The Company shall furnish to the Investor without charge, (i) at least one copy of each
Registration Statement as declared effective by the SEC and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein by reference,
all exhibits and each preliminary prospectus, (ii) at the request of the Investor, at
least one copy of the final prospectus included in such Registration Statement and all amendments
and supplements thereto (or such other number of copies as the Investor may reasonably request)
and (iii) such other documents as the Investor may reasonably request from time to time
in order to facilitate the disposition of the Common Shares owned by the Investor pursuant
to a Registration Statement. Filing of the forgoing with the SEC via its EDGAR system shall
satisfy the requirements of this Section. |
| (f) | Amendments and Other Filings.
The Company shall (i) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the related prospectus
used in connection with such Registration Statement, which prospectus is to be filed pursuant
to Rule 424 promulgated under the Securities Act, as may be necessary to keep such Registration
Statement effective at all times during the Commitment Period, and prepare and file with
the SEC such additional Registration Statements in order to register for resale under the
Securities Act all of the Advance Shares; (ii) cause the related prospectus to be amended
or supplemented by any required prospectus supplement (subject to the terms of this Agreement),
and as so supplemented or amended to be filed pursuant to Rule 424 promulgated under
the Securities Act; (iii) provide the Investor copies of all correspondence from and
to the SEC relating to a Registration Statement (provided that the Company may excise any
information contained therein which would constitute material non-public information unless
otherwise requested by the Investor), and (iv) comply with the provisions of the Securities
Act with respect to the disposition of all Common Shares of the Company covered by such Registration
Statement until such time as all of such Common Shares shall have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the case of amendments and supplements to a Registration
Statement which are required to be filed pursuant to this Agreement (including pursuant to
this Section 7.01(d) by reason of the Company’s filing a report on Form 10-K,
Form 10-Q, or Form 8-K or any analogous report under the Exchange Act, provided
that such report is not automatically incorporated by reference into the applicable Registration
Statement), the Company shall file such report in a prospectus supplement filed pursuant
to Rule 424 promulgated under the Securities Act to incorporate such filing into the
Registration Statement, if applicable, or shall file such amendments or supplements with
the SEC either on the day on which the Exchange Act report is filed which created the requirement
for the Company to amend or supplement the Registration Statement, if feasible, or otherwise
promptly thereafter. |
| (g) | Blue-Sky. The Company shall
use its commercially reasonable efforts to, if required by Applicable Laws, (i) register
and qualify the Common Shares covered by a Registration Statement under such other securities
or “blue sky” laws of such jurisdictions in the United States as the Investor
reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including
post-effective amendments) and supplements to such registrations and qualifications as may
be necessary to maintain the effectiveness thereof during the Commitment Period, (iii) take
such other actions as may be necessary to maintain such registrations and qualifications
in effect at all times during the Commitment Period, and (iv) take all other actions
reasonably necessary or advisable to qualify the Common Shares for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection therewith or as a
condition thereto to (w) make any change to its Articles of Incorporation or Bylaws
or any other organizational documents of the Company or any of its Subsidiaries, (x) qualify
to do business in any jurisdiction where it would not otherwise be required to qualify but
for this Section 7.01, (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction. The Company
shall promptly notify the Investor of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the Common Shares
for sale under the securities or “blue sky” laws of any jurisdiction in the United
States or its receipt of actual notice of the initiation or threat of any proceeding for
such purpose. |
Section 7.02 Listing
of Common Shares. The Company shall use its commercially reasonable efforts to cause the Common Shares to continue to be registered
as a class of securities under Section 12(b) of the Exchange Act, and to comply with its reporting and filing obligations under
the Exchange Act, and shall not take any action or file any document (whether or not permitted by the Securities Act or the Exchange
Act) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act, except as permitted herein. The Company shall use its commercially reasonable efforts to continue the listing and
trading of its Common Shares and the listing of the Shares purchased by the Investor hereunder on the Principal Market and to comply
with the Company’s reporting, filing and other obligations under the rules and regulations of the Principal Market. If the
Company receives any final and non-appealable notice that the listing or quotation of the Common Shares on the Principal Market shall
be terminated on a date certain, the Company shall promptly (and in any case within 24 hours) notify the Investor of such fact in writing
and shall use its commercially reasonable efforts to cause the Common Shares to be listed or quoted on another Principal Market.
Section 7.03 Opinion
of Counsel. Prior to the date of the delivery by the Company of the first Request, the Investor shall have received an opinion letter
from counsel to the Company in form and substance reasonably satisfactory to the Investor.
Section 7.04 Exchange
Act Registration. The Company will use commercially reasonable efforts to file in a timely manner all reports and other documents
required of it as a reporting company under the Exchange Act and will not take any action or file any document (whether or not permitted
by Exchange Act or the rules thereunder) to terminate or suspend its reporting and filing obligations under the Exchange Act.
Section 7.05 Transfer
Agent Instructions. For any time while there is a Registration Statement in effect for this transaction, the Company shall (if required
by the transfer agent for the Common Shares) cause legal counsel for the Company to deliver to the transfer agent for the Common Shares
(with a copy to the Investor) instructions to issue Common Shares to the Investor free of restrictive legends upon each Advance if the
delivery of such instructions are consistent with Applicable Law.
Section 7.06 Corporate
Existence. The Company will use commercially reasonable efforts to preserve and continue the corporate existence of the Company during
the Commitment Period.
Section 7.07 Notice
of Certain Events Affecting Registration; Suspension of Right to Make an Advance. The Company will promptly notify the Investor,
and confirm in writing, upon its becoming aware of the occurrence of any of the following events in respect of a Registration Statement
or related Prospectus (in each of which cases the information provided to Investor will be kept strictly confidential): (i) except
for requests made in connection with SEC investigations disclosed in the SEC Documents, receipt of any request for additional information
by the SEC or any other Federal or state governmental authority during the period of effectiveness of the Registration Statement or any
request for amendments or supplements to the Registration Statement or related Prospectus; (ii) the issuance by the SEC or any other
Federal governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption
from qualification of any of the Common Shares for sale in any jurisdiction or the initiation or written threat of any proceeding for
such purpose; (iv) the happening of any event that makes any statement made in the Registration Statement or related Prospectus
or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making
of any changes in the Registration Statement, related Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and that in the case of the related Prospectus, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or of the necessity to amend the Registration Statement or supplement
a related Prospectus to comply with the Securities Act or any other law; (v) the Company’s reasonable determination that a
post-effective amendment to the Registration Statement would be appropriate and the Company will promptly make available to the Investor
any such supplement or amendment to the related Prospectus; (vi) the Common Shares shall cease to be authorized for listing on the
Principal Market; or (vii) the Company fails to file in a timely manner all reports and other documents required of it as a reporting
company under the Exchange Act. The Investor shall not deliver to the Company any Purchase Notice, and the Company shall not sell any
Shares pursuant to any pending Purchase Notice, during the continuation of any of the foregoing events (each of the events described
in the immediately preceding clauses (i) through (vii), inclusive, a “Material Outside Event”).
Section 7.08 Market
Activities. The Company will not, directly or indirectly, take any action designed to cause or result in, or that constitutes or
might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company under Regulation
M of the Exchange Act.
Section 7.09 Expenses.
The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, will pay all expenses
incident to the performance of its obligations hereunder, including but not limited to (i) the preparation, printing and filing
of the Registration Statement and each amendment and supplement thereto, of each prospectus and of each amendment and supplement thereto;
(ii) the preparation, issuance and delivery of any Shares issued pursuant to this Agreement, (iii) all fees and disbursements
of the Company’s counsel, accountants and other advisors (but not, for the avoidance doubt, the fees and disbursements of Investor’s
counsel, accountants and other advisors), (iv) the qualification of the Shares under securities laws in accordance with the provisions
of this Agreement, including filing fees in connection therewith, (v) the printing and delivery of copies of any prospectus and
any amendments or supplements thereto, (vi) the fees and expenses incurred in connection with the listing or qualification of the
Shares for trading on the Principal Market, or (vii) filing fees of the SEC and the Principal Market.
Section 7.10 Current
Report. The Company shall, not later than 9:00 a.m., New York City time, on the first business day after the date of this Agreement,
file with the SEC a Current Report on Form 8-K disclosing the execution of this Agreement by the Company and the Investor (including
any exhibits thereto, the “Current Report”). The Company shall provide the Investor and its legal counsel a reasonable
opportunity to comment on a draft of the Current Report prior to filing the Current Report with the SEC and shall give due consideration
to all such comments. From and after the filing of the Current Report with the SEC, the Company shall have publicly disclosed all material,
nonpublic information delivered to the Investor (or the Investor’s representatives or agents) by the Company or any of its Subsidiaries,
or any of their respective officers, directors, employees, agents or representatives (if any) in connection with the transactions contemplated
by the Transaction Documents. The Company understands and confirms that the Investor will rely on the foregoing representations in effecting
resales of Common Shares under the Registration Statement or otherwise.
Section 7.11 Use
of Proceeds. Neither the Company nor any Subsidiary will, directly or indirectly, use the proceeds of the transactions contemplated
herein to repay any advances or loans to any executives, directors, or employees of the Company or any Subsidiary, or to make any payments
in respect of any related party obligations. Neither the Company nor any of its Subsidiaries will, directly or indirectly, use the proceeds
from the transactions contemplated herein, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture
partner or other Person (a) for the purpose of funding or facilitating any activities or business of or with any Person or in any
country or territory that, at the time of such funding or facilitation, is the subject of Sanctions or is a Sanctioned Country, or (b) in
any other manner that will result in a violation of Sanctions or Applicable Laws by any Person (including any Person participating in
the transactions contemplated by this Agreement, whether as underwriter, advisor, investor or otherwise).
Section 7.12 Compliance
with Laws. The Company shall comply in all material respects with all Applicable Laws.
Section 7.13 Selling
Restrictions. (i) Except as expressly set forth below, the Investor covenants that from and after the date hereof through and
including the Trading Day next following the expiration or termination of this Agreement as provided in Section 10.01 (the “Restricted
Period”), none of the Investor any of its officers, or any entity managed or controlled by the Investor (collectively, the
“Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”)
shall, directly or indirectly, (i) engage in any “short sale” (as such term is defined in Rule 200 of Regulation
SHO of the Exchange Act) of the Common Shares or (ii) engage in any hedging transaction, which establishes a net short position
with respect to the Common Shares, with respect to each of clauses (i) and (ii) hereof, either for its own principal account
or for the principal account of any other Restricted Person. Notwithstanding the foregoing, it is expressly understood and agreed that
nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person during
the Restricted Period from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation SHO) the
Shares; or (2) selling a number of Common Shares equal to the number of Shares that such Restricted Person is unconditionally obligated
to purchase under a pending Purchase Notice but has not yet received from the Company or the Transfer Agent pursuant to this Agreement
(which such sales may be coded as “short exempt” by broker-dealers executing sell orders on behalf of the Investor).
Section 7.14 Assignment.
Neither this Agreement nor any rights or obligations of the parties hereto may be assigned to any other Person.
Section 7.15 No
Variable Rate Transactions. Except with respect to the Investor (including the Prior PPA Agreements) or without the Investor’s
prior written consent, the Company shall not effect or enter into an agreement to effect any Variable Rate Transaction for so long as
any Prepaid Advance is outstanding, unless any outstanding Prepaid Advance will be fully repaid in connection with such transaction.
Section 7.16 Material
Non-Public Information. The Company covenants and agrees that, other than as expressly required by Section 7.01(d) hereof
it shall refrain from disclosing, and shall cause its officers, directors, employees and agents to refrain from disclosing, any material
non-public information (as determined under the Securities Act, the Exchange Act, or the rules and regulations of the SEC) to the
Investor without also disseminating such information to the public within a reasonable time period thereafter, unless prior to disclosure
of such information the Company identifies such information as being material non-public information and provides the Investor with the
opportunity to accept or refuse to accept such material non-public information for review.
Section 7.17 Reservation
of Common Shares; Shareholder Vote.
The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common
Stock solely for the purpose of issuance under this Agreement, as herein provided, free from preemptive rights or any other actual contingent
purchase rights of persons other than the Investor, not less than such number of shares of the Common Stock as shall be issuable under
the Prepaid Advances. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and
validly authorized, issued and fully paid, nonassessable. If at any time that
there are outstanding Prepaid Advances and the Company has insufficient (i) authorized but unissued Common Shares or (ii) Common
Shares to issue pursuant to the Exchange Cap, in each case, in order to satisfy the outstanding Prepaid Advances in full, then the Company
shall, within 45 days of written notice from the Investor, call and hold a meeting of its shareholders (or take action by written consent)
for the purpose of, as applicable, (y) amending the Company’s charter to increase the number of authorized but unissued Common
Shares and/or (z) approving the issuance of Common Shares pursuant to Advances in excess of the maximum number of shares that are
permitted to be issued in accordance with the rules and regulations of the Principal Market. Any shareholder proposals submitted
in accordance with the forgoing shall seek authorization of any amount not less than two times the then-existing outstanding Prepaid
Advances calculated using the VWAP of the Common Shares at the time such proposals are submitted to the shareholders for a vote.
Article VIII.
Non-Exclusive Agreement
Notwithstanding anything
contained herein, this Agreement and the rights awarded to the Investor hereunder are non-exclusive, and the Company may, at any time
throughout the term of this Agreement and thereafter, issue and allot, or undertake to issue and allot, any shares and/or securities
and/or convertible notes, bonds, debentures, options to acquire shares or other securities and/or other facilities which may be converted
into or replaced by Common Shares or other securities of the Company, and to extend, renew and/or recycle any bonds and/or debentures,
and/or grant any rights with respect to its existing and/or future share capital.
Article IX.
Choice of Law/Jurisdiction
This Agreement, and any and all claims, proceedings
or causes of action relating to this Agreement or arising from this Agreement or the transactions contemplated herein, including, without
limitation, tort claims, statutory claims and contract claims, shall be interpreted, construed, governed and enforced under and solely
in accordance with the substantive and procedural laws of the State of New York, in each case as in effect from time to time and as the
same may be amended from time to time, and as applied to agreements performed wholly within the State of New York. The Parties further
agree that any action between them shall be heard in New York County, New York, and expressly consent to the jurisdiction and venue of
the Supreme Court of New York, sitting in New York County, New York and the United States District Court of the Southern District of
New York, sitting in New York, New York, for the adjudication of any civil action asserted pursuant to this Agreement.
EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN, THE PERFORMANCE THEREOF OR THE FINANCINGS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
Article X. Termination
Section 10.01 Termination.
| (a) | Unless earlier terminated as provided
hereunder, the Commitment Period shall terminate automatically on the earliest of (i) the
first day of the month next following the 24-month anniversary of the date hereof or (ii) the
date on which the Investor shall have made payment of Advances pursuant to this Agreement
for Common Shares equal to $100 million. This Agreement shall remain in effect so long as
any amounts are due and owing by the Company to the Investor on any Prepaid Advance. |
| (b) | The Company may terminate this Agreement
effective upon five Trading Days’ prior written notice to the Investor; provided
that (i) there are no outstanding Purchase Notices, (ii) there are no outstanding
Prepaid Advances which have not be fully repaid, (iii) all the Advance Shares issued
to the Investor hereunder have been sold, and (iv) the Company has paid all amounts
owed to the Investor pursuant to this Agreement. This Agreement may be terminated at any
time by the mutual written consent of the parties, effective as of the date of such mutual
written consent unless otherwise provided in such written consent. |
| (c) | Nothing in this Section 10.01 shall
be deemed to release the Company or the Investor from any liability for any breach under
this Agreement, or to impair the rights of the Company and the Investor to compel specific
performance by the other party of its obligations under this Agreement. The indemnification
provisions contained in Article VI shall survive termination hereunder. |
Article XI. Notices
Other than with respect to
Purchase Notices, which must be in writing and will be deemed delivered on the day set forth in Section 2.01, any notices, consents,
waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile or e-mail if
sent on a Trading Day, or, if not sent on a Trading Day, on the immediately following Trading Day; (iii) 5 days after being sent
by U.S. certified mail, return receipt requested, (iv) 1 day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications (except
for Purchase Notices which shall be delivered in accordance with Exhibit A hereof) shall be:
If to the Company, to: |
Canoo Inc.
15520 HWY 114, Suite 2C
Justin, Texas 76247 |
|
Attention: [****]; [****] |
|
Email: [****]; [****] |
If to the Investor(s): |
YA II PN, Ltd. |
|
|
1012 Springfield Avenue |
|
|
Mountainside, NJ 07092 |
|
|
Attention: |
[****] |
|
|
|
[****] |
|
|
Telephone: |
[****] |
|
|
Email: |
[****] |
|
With a Copy (which shall not
constitute notice or delivery of
process) to: |
[****].
1012 Springfield Avenue
Mountainside, NJ 07092 |
|
|
Telephone: |
[****] |
|
|
Email: |
[****] |
|
Either may change its information contained in
this Article XI by delivering notice to the other party as set forth herein.
Article XII. Miscellaneous
Section 12.01 Reimbursement
of Fees, Costs and Expenses. If an Event of Default has occurred, then the Company shall reimburse the Investor promptly for all
reasonable and documented out-of-pocket fees, costs and expenses, including, without limitation, reasonable and documented attorneys’
fees and expenses incurred by the Investor in any action in connection with this Agreement, including, without limitation, those incurred:
(i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Investor’s rights,
remedies and obligations, (ii) collecting any sums which become due to the Investor in accordance with the terms of this Agreement,
(iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation
or enforcement of any rights or remedies of the Investor.
Section 12.02 Counterparts.
This Agreement may be executed in identical counterparts, both which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party. Facsimile or other electronically scanned
and delivered signatures, including by e-mail attachment, shall be deemed originals for all purposes of this Agreement.
Section 12.03 Entire
Agreement; Amendments. This Agreement supersedes all other prior oral or written agreements between the Investor, the Company, their
respective affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement contains the
entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither
the Company nor the Investor makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing signed by the parties to this Agreement.
Section 12.04 Reporting
Entity for the Common Shares. The reporting entity relied upon for the determination of the trading price or trading volume of the
Common Shares on any given Trading Day for the purposes of this Agreement shall be Bloomberg, L.P. or any successor thereto. The written
mutual consent of the Investor and the Company shall be required to employ any other reporting entity.
Section 12.05 Structuring
and Due Diligence Fee; Commitment Fee. Each of the parties shall pay its own fees and expenses (including the fees of any attorneys,
accountants, appraisers or others engaged by such party) in connection with this Agreement and the transactions contemplated hereby,
except that the Company shall pay to the Investor (i) solely with respect to the initial Request and the first Prepaid Advance a
structuring fee in the amount of $10,000 on the date hereof and (ii) on each Pre-Advance Date, a commitment fee in the amount equal
to 5% of the principal amount of such Prepaid Advance, which shall be deducted by the Investor from the proceeds of such Prepaid Advance.
Section 12.06 Brokerage.
Each of the parties hereto represents that it has had no dealings in connection with this transaction with any finder or broker who will
demand payment of any fee or commission from the other party. The Company on the one hand, and the Investor, on the other hand, agree
to indemnify the other against and hold the other harmless from any and all liabilities to any person claiming brokerage commissions
or finder’s fees on account of services purported to have been rendered on behalf of the indemnifying party in connection with
this Agreement or the transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF,
the parties hereto have caused this Prepaid Advance Agreement to be executed by the undersigned, thereunto duly authorized, as of the
date first set forth above.
|
COMPANY: |
|
CANOO INC. |
|
|
|
|
By: |
/s/ Greg Ethridge |
|
Name: |
Greg Ethridge |
|
Title: |
Chief Financial Officer |
|
INVESTOR: |
|
YA II PN, LTD. |
|
|
|
By: |
Yorkville Advisors Global, LP |
|
Its: |
Investment Manager |
|
|
|
|
|
By: |
Yorkville Advisors Global II, LLC |
|
|
Its: |
General Partner |
|
|
|
|
|
|
By: |
/s/ Matt Beckman |
|
|
Name: |
Matt Beckman |
|
|
Title: |
Member |
ANNEX I TO THE
PREPAID ADVANCE AGREEMENT
DEFINITIONS
“Advance” shall mean any purchase
by the Investor of Advance Shares from the Company pursuant to this Agreement.
“Advance Shares” shall mean
the Common Shares that the Investor shall purchase from the Company, and the Company shall issue and sell to the Investor, hereunder.
“Agreement” shall have the
meaning set forth in the preamble of this Agreement.
“Amortization Event” shall
mean at any time (i) the daily VWAP is less than the Floor Price then in effect for five (5) Trading Days during a period of
seven (7) consecutive Trading Days (a “Floor Price Event”), (ii) the Company has issued in excess of 99%
of the Common Shares available under the Exchange Cap, where applicable (an “Exchange Cap Event”), or (iii) any
of the Common Shares to be issued hereunder are not eligible to be sold pursuant to a Registration Statement for a period of ten consecutive
Trading Days (a “Registration Event”) (the last such day of each such occurrence, a “Amortization Event Date”).
“Amortization Principal Amount”
with respect to a Prepaid Advance shall mean the sum of (i) the outstanding principal amount of such Prepaid Advance divided by
the lower of (y) the number of months remaining until the Maturity Date of such Prepaid Advance, or (z) 5.
“Applicable Laws” shall mean
all applicable laws, statutes, rules, regulations, orders, executive orders, directives, policies, guidelines and codes having the force
of law, whether local, national, or international, as amended from time to time, including without limitation (i) all applicable
laws that relate to money laundering, terrorist financing, financial record keeping and reporting, (ii) all applicable laws that
relate to anti-bribery, anti-corruption, books and records and internal controls, including the United States Foreign Corrupt Practices
Act of 1977, and (iii) any Sanctions laws.
Base Prospectus” shall mean the
Company’s prospectus dated May 19, 2022 forming a part of the Registration Statement.
“Basket” shall have the meaning
set forth in Section 6.04.
“Closing” shall have the meaning
set forth in Section 2.01.
“Commitment Period” shall
mean the period commencing on the date hereof and expiring upon the date of termination of this Agreement in accordance with Section 10.01.
“Common Shares” shall have
the meaning set forth in the recitals of this Agreement.
“Company” shall have the meaning
set forth in the preamble of this Agreement.
“Company Indemnitees” shall
have the meaning set forth in Section 6.02.
“Environmental Laws” shall
have the meaning set forth in Section 5.13.
“Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Cap” shall have
the meaning set forth in Section 3.01(b)(ii).
“Fixed Price” shall mean (i) solely
with respect to the initial Request and first Prepaid Advance, $2.70 per share, and (ii) with respect to any other Prepaid Advance
other than the first Prepaid Advance, a price per share equal to 120% of the Market Price as of the Trading Day immediately prior to
the Pre-Advance Date.
“Floor Price” means $1.00
per share.
“Hazardous Materials” shall
have the meaning set forth in Section 5.13.
“Indemnified Liabilities”
shall have the meaning set forth in Section 6.01.
“Investor” shall have the
meaning set forth in the preamble of this Agreement.
“Investor Indemnitees” shall
have the meaning set forth in Section 6.01.
“Initial Registration Statement”
shall have the meaning set forth in Section 7.01(a).
“Market Price” shall mean
the VWAP on the applicable date of determination.
“Material Adverse Effect”
shall mean any event, occurrence or condition that has had or would reasonably be expected to have (i) a material adverse effect
on the legality, validity or enforceability of this Agreement or the transactions contemplated herein, (ii) a material adverse effect
on the results of operations, assets, business or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a
whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its
obligations under this Agreement.
“Material Outside Event” shall
have the meaning set forth in Section 7.07.
“Maturity Date” shall have
the meaning set forth in Section 2.03(b).
“Maximum Advance Amount” in
respect of each Request means $15,000,000 (or such greater amount that the parties may mutually agree), provided that the amount
of such Request shall not cause the aggregate of all Prepaid Advances to exceed $100 million.
“Nasdaq Official Closing
Price” means the closing price of a Common Share as reported on the “Historical NOCP” section of the web site Nasdaq.com
for the ticker symbol “GOEV.”
“OFAC” shall have the meaning
set forth in Section 5.29.
“Ownership Limitation” shall
have the meaning set forth in Section 3.01(b)(i).
“Payment Premium” means 3%
of the principal amount being paid or redeemed.
“Periodic Reports” shall mean
all of the Company’s reports required to be filed by the Company with the Commission under applicable laws and regulations (including,
without limitation, Regulation S-K), including annual reports (on Form 10-K), quarterly reports (on Form 10-Q).
“Person” shall mean an individual,
a corporation, a partnership, a limited liability company, a trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
“Plan of Distribution” shall
mean the section of a Registration Statement disclosing the plan of distribution of the Shares.
“Pre-Advance
Date” shall have the meaning set forth in Section 2.01.
“Prepaid
Advance” shall have the meaning set forth in Section 2.01.
“Principal Market” shall mean
the Nasdaq Capital Market; provided however, that in the event the Company’s Common Shares are ever listed or traded on the New
York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, or the Nasdaq Global Market, then the “Principal Market”
shall mean such other market or exchange on which the Company’s Common Shares are then listed or traded.
“Prior PPA Agreements” means
that certain (i) Prepaid Advance Agreement, dated July 20, 2022, by and between the Investor and the Company (as amended and
supplemented from time to time) and (ii) Prepaid Advance Agreement, dated June 13, 2024, by and between the Investor and the
Company (as amended and supplemented from time to time).
“Prospectus” means any prospectus
(including, without limitation, all amendments and supplements thereto) used in connection with a Registration Statement.
“Prospectus Supplement” shall
mean any prospectus supplement to a Prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act, including,
without limitation, any Prospectus Supplement to be filed in accordance with Section 7.01 hereof.
“Purchase Notice” shall have
the meaning set forth in Section 3.01(a).
“Purchase Notice Date” shall
mean each date the Investor delivers to the Company a Purchase Notice.
“Purchase Price” shall mean,
(I) solely with respect to the initial Request and first Prepaid Advance, (x) during the initial 60 days after the first Pre-Advance
Date, the Fixed Price, and (y) after the initial 60 days after the first Pre-Advance Date, the lower of (i) the Fixed Price
and (ii) 95% of the lowest daily VWAP during five Trading Days immediately preceding each Purchase Notice Date, but not lower than
the Floor Price (the “Variable Price”); and (II) with respect to any other Prepaid Advance other than the first
Prepaid Advance, the lower of (a) the Fixed Price and (b) the Variable Price.
“Registration Statement” shall
mean the Initial Registration Statement or another registration statement on a form promulgated by the SEC for which the Company then
qualifies for the registration of the offer and sale of the Shares to be offered and sold by the Company to the Investor and the resale
of such Shares by the Investor, as the same may be amended and supplemented from time to time and including any information deemed to
be a part thereof pursuant to Rule 430B under the Securities Act and any successor registration statement filed by the Company with
the SEC under the Securities Act on a form promulgated by the SEC for which the Company then qualifies and which form shall be available
for the registration of the transactions contemplated hereunder.
“Request” shall have the meaning
set forth in Section 2.01.
“Sanctions” shall have the
meaning set forth in Section 5.29.
“Sanctioned Countries” shall
have the meaning set forth in Section 5.29.
“SEC” shall mean the U.S.
Securities and Exchange Commission.
“SEC Documents” shall mean
(1) any registration statement on Form S-4 filed by the Company with the SEC, including any related prospectus or prospectuses,
for the registration of the Common Shares, on file with the SEC at the time such registration statement became effective, including the
financial statements, schedules, exhibits and all other documents filed as a part thereof or incorporated therein and all information
deemed to be a part thereof as of the effective date of such registration statement under the Securities Act, (2) any proxy statement
or prospectus filed by the Company with the SEC, including all documents incorporated or deemed incorporated therein by reference, whether
or not included in a registration statement on Form S-4, in the form in which such proxy statement or prospectus has most recently
been filed with the SEC pursuant to Rule 424(b) under the Securities Act, (3) all reports, schedules, registrations, forms,
statements, information and other documents filed with or furnished to the SEC by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act during the two years prior to the date hereof, including, without limitation, the Current Report,
(4) each Registration Statement, as the same may be amended from time to time, the Prospectus contained therein and each Prospectus
Supplement thereto and (5) all information contained in such filings and all documents and disclosures that have been and heretofore
shall be incorporated by reference therein.
“Securities Act” shall have
the meaning set forth in the recitals of this Agreement.
“Shares” shall mean the Common
Shares to be issued from time to time hereunder pursuant to an Advance.
“Subsidiaries” shall mean
any Person in which the Company, directly or indirectly, (x) owns a majority of the outstanding capital stock or holds a majority
of the equity or similar interest of such Person or (y) controls or operates all or substantially all of the business, operations
or administration of such Person, and the foregoing are collectively referred to herein as “Subsidiaries.”
“Trading Day” shall mean any
day during which the Principal Market shall be open for business.
“Transaction Documents” means,
collectively, this Agreement and each of the other agreements and instruments entered into or delivered by any of the parties hereto
in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
“Variable Rate Transaction”
shall mean a transaction in which the Company (i) issues or sells any equity or debt securities that are convertible into, exchangeable
or exercisable for, or include the right to receive additional Common Shares either (A) at a conversion price, exercise price, exchange
rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Shares at any time after
the initial issuance of such equity or debt securities, or (B) with a conversion, exercise or exchange price that is subject to
being reset at some future date after the initial issuance of such equity or debt security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the market for the Common Shares (including, without limitation,
any “full ratchet” or “weighted average” anti-dilution provisions, but not including any standard anti-dilution
protection for any reorganization, recapitalization, non-cash dividend, stock split or other similar transaction) or (ii) issues
or sells any equity or debt securities either (A) at a price that is subject to being reset at some future date after the initial
issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the
business of the Company or the market for the Common Shares (other than standard anti-dilution protection for any reorganization, recapitalization,
non-cash dividend, stock split or other similar transaction), or (B) that are subject to or contain any put, call, redemption, buy-back,
price-reset or other similar provision or mechanism (including, without limitation, a “Black-Scholes” put or call right,
other than in connection with a “fundamental transaction”) that provides for the issuance of additional equity securities
of the Company or the payment of cash by the Company. For the avoidance of doubt, the Company shall be permitted to enter into an “at
the market offering” or other continuous offering or similar offering of Common Shares with a registered broker-dealer, whereby
the Company may sell Common Shares at a future determined price; however, the Company shall not be permitted to execute any transactions
under such agreement unless (i) an Amortization Event has occurred and is continuing, or (ii) there is no balance outstanding
under all prior Prepaid Advances.
“VWAP” means, for any Trading
Day, the daily volume weighted average price of the Common Shares for such Trading Day on the Principal Market during regular trading
hours as reported by Bloomberg L.P.
EXHIBIT A
FORM OF PURCHASE NOTICE
CANOO INC.
Dated: ______________ |
Investor Notice Number: ____ |
|
On behalf of YA II PN, LTD.
(the “Investor”), the undersigned hereby certifies, with respect to the purchase of Common Shares of CANOO INC. (the
“Company”) issuable in connection with this Purchase Notice, delivered pursuant to that certain Prepaid Advance Agreement,
dated as of July __, 2024 as amended and supplemented from time to time (the “Agreement”), as follows:
1. |
Advance
requested in the Purchase Notice |
|
2. |
Purchase Price |
|
3. |
Number of Shares
due to Investor |
|
The aggregate purchase price of the Shares to
be paid by Investor pursuant to this Purchase Notice shall be offset against amounts outstanding under the Prepaid Advance made pursuant
to the Request dated [__________] (first towards accrued and unpaid interest, and then towards outstanding principal) as follows:
1. |
Amount
offset against accrued and unpaid Interest |
$[____________] |
2. |
Amount offset
against principal |
$[____________] |
3. |
Total amount
of Prepaid Advance outstanding following the Advance |
$[____________] |
Please issue the number of Shares due to the Investor to the account
of the Investor as follows:
Investor’s DTC participant
#:
ACCOUNT NAME:
ACCOUNT NUMBER:
ADDRESS:
CITY:
COUNTRY:
Contact person:
Number and/or email:
Please deliver this Purchase Notice by email
to:
Email: [_______________]
Attention: [_____________]
Confirmation Telephone Number: [__________].
The undersigned has executed this Purchase Notice
as of the date first set forth above.
YA II PN, LTD. |
|
|
|
|
By: |
Yorkville Advisors Global, LP |
|
Its: |
Investment Manager |
|
|
|
|
|
By: |
Yorkville Advisors Global II, LLC |
|
|
Its: |
General Partner |
|
|
|
|
|
|
By: |
|
|
|
Name: |
|
|
|
Title: |
|
|
EXHIBIT B
FORM OF WARRANT
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED
FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT
TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT.
CANOO INC.
Warrant To Purchase Common Stock
Warrant No.: GOEV-[__] |
Number of Shares: |
[__] |
|
Warrant Exercise Price: |
[__] |
Date of Issuance: [__], 2024
CANOO INC., a Delaware corporation (the
“Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, YA II PN, Ltd. (the “Holder”), the registered holder hereof or its permitted assigns, is
entitled, subject to the terms set forth below, to purchase from the Company upon surrender of this Warrant, at any time or times on or
after the first Business Day immediately following the 6-month anniversary of the Issuance Date, but not after 11:59 P.M. Eastern
Time on the Expiration Date (as defined herein) [___] fully paid and nonassessable shares of Common Stock (as defined herein) of the Company
(the “Warrant Shares”) at the exercise price per share provided in Section 1(b) below or as subsequently
adjusted; provided, however, that in no event shall the holder be entitled to exercise this Warrant for a number of Warrant Shares
in excess of that number of Warrant Shares which, upon giving effect to such exercise, would cause the aggregate number of shares of Common
Stock beneficially owned by the holder and its affiliates to exceed 4.99% of the outstanding shares of the Common Stock following such
exercise, except within sixty (60) days of the Expiration Date (however, such restriction may be waived by Holder (but only as to itself
and not to any other holder) upon not less than 65 days prior notice to the Company). For purposes of the foregoing proviso, the aggregate
number of shares of Common Stock beneficially owned by the holder and its affiliates shall include the number of shares of Common Stock
issuable upon exercise of this Warrant with respect to which the determination of such proviso is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised Warrants beneficially owned by the holder
and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company
beneficially owned by the holder and its affiliates (including, without limitation, any convertible notes or preferred stock) subject
to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence,
for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. For purposes of this Warrant, in determining the number of outstanding shares of Common Stock a holder
may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-Q or
Form 10-K, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company
or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written request of any holder, the Company
shall promptly, but in no event later than one (1) Business Day following the receipt of such notice, confirm in writing to any such
holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined
after giving effect to the exercise of Warrants (as defined below) by such holder and its affiliates since the date as of which such number
of outstanding shares of Common Stock was reported.
Section 1.
(a) This
Warrant is being issued pursuant to the Warrant Cancellation and Exchange Agreement (“Issuance Agreement”) of even
date herewith between the Company and the Holder or issued in exchange or substitution thereafter or replacement thereof. Each Capitalized
term used, and not otherwise defined herein, shall have the meaning ascribed thereto in the Issuance Agreement.
(b) Definitions.
The following words and terms as used in this Warrant shall have the following meanings:
(i) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York are authorized
or required by law to remain closed.
(ii) “Closing
Bid Price” means the closing bid price of Common Stock as quoted on the Principal Market (as reported by Bloomberg Financial
Markets (“Bloomberg”) through its “Volume at Price” function).
(iii) “Common
Stock” means (i) the Company’s common stock, par value $0.001 per share, and (ii) any capital stock into which
such Common Stock shall have been changed or any capital stock resulting from a reclassification of such Common Stock.
(iv) “Expiration
Date” means [___]. If such date falls on a Saturday, Sunday or other day on which banks are required or authorized to be closed
in the City of New York or the State of New York or on which trading does not take place on the Principal Exchange or automated quotation
system on which the Common Stock is traded (a “Holiday”), the next date that is not a Holiday.
(v) “Issuance
Date” means the date hereof.
(vi) “Options”
means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.
(vii) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization
and a government or any department or agency thereof.
(viii) “Principal
Market” means on any of (a) the American Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq National
Market, or (d) the Nasdaq Capital Market.
(ix) “Securities
Act” means the Securities Act of 1933, as amended.
(x) “Warrant”
means this Warrant and all Warrants issued in exchange, transfer or replacement thereof.
(xi) “Warrant
Exercise Price” shall be $[___] or as subsequently adjusted as provided in Section 8 hereof.
(c) Other
Definitional Provisions.
(i) Except
as otherwise specified herein, all references herein (A) to the Company shall be deemed to include the Company’s successors
and (B) to any applicable law defined or referred to herein shall be deemed references to such applicable law as the same may have
been or may be amended or supplemented from time to time.
(ii) When
used in this Warrant, the words “herein”, “hereof”, and “hereunder” and
words of similar import, shall refer to this Warrant as a whole and not to any provision of this Warrant, and the words “Section”,
“Schedule”, and “Exhibit” shall refer to Sections of, and Schedules and Exhibits to, this Warrant
unless otherwise specified.
(iii) Whenever
the context so requires, the neuter gender includes the masculine or feminine, and the singular number includes the plural, and vice versa.
Section 2. Exercise
of Warrant.
(a) Subject
to the terms and conditions hereof, this Warrant may be exercised by the holder hereof then registered on the books of the Company, pro
rata as hereinafter provided, at any time on any Business Day on or after the opening of business on such Business Day, commencing with
the first Business Day immediately following the 6-month anniversary of the Issuance Date, and prior to 11:59 P.M. Eastern Time
on the Expiration Date (i) by delivery of a written notice, in the form of the subscription notice attached as Exhibit A
hereto (the “Exercise Notice”), of such holder’s election to exercise this Warrant, which notice shall specify
the number of Warrant Shares to be purchased, payment to the Company of an amount equal to the Warrant Exercise Price(s) applicable
to the Warrant Shares being purchased, multiplied by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to
which this Warrant is being exercised (plus any applicable issue or transfer taxes) (the “Aggregate Exercise Price”)
in cash or wire transfer of immediately available funds and the surrender of this Warrant (or an indemnification undertaking with respect
to this Warrant in the case of its loss, theft or destruction) to a common carrier for overnight delivery to the Company as soon as practicable
following such date (“Cash Basis”) or (ii) if at the time of exercise, the Warrant Shares are not subject to an
effective registration statement, or can be sold without restriction or limitation pursuant to Rule 144 as promulgated under the
Securities Act by delivering an Exercise Notice and in lieu of making payment of the Aggregate Exercise Price in cash or wire transfer,
elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following
formula (the “Cashless Exercise”):
Net Number = (A x B) – (A x C)
B
For purposes of the foregoing formula:
A = the total number of Warrant Shares with respect to which
this Warrant is then being exercised.
B = the Closing Bid Price of the Common Stock on the date of
exercise of the Warrant.
C = the Warrant Exercise Price then in effect for the applicable
Warrant Shares at the time of such exercise.
(b) In
the event of any exercise of the rights represented by this Warrant in compliance with this Section 2, the Company shall on or before
the fifth (5th) Business Day following the date of receipt of the Exercise Notice, the Aggregate Exercise Price and this Warrant
(or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction) and the receipt of the
representations of the holder specified in Section 6 hereof, if requested by the Company (the “Exercise Delivery Documents”),
and if the Common Stock is DTC eligible, credit such aggregate number of shares of Common Stock to which the holder shall be entitled
to the holder’s or its designee’s balance account with The Depository Trust Company; provided, however, if the holder who
submitted the Exercise Notice requested physical delivery of any or all of the Warrant Shares, or, if the Common Stock is not DTC eligible
then the Company shall, on or before the fifth (5th) Business Day following receipt of the Exercise Delivery Documents,
issue and surrender to a common carrier for overnight delivery to the address specified in the Exercise Notice, a certificate, registered
in the name of the holder, for the number of shares of Common Stock to which the holder shall be entitled pursuant to such request. Upon
delivery of the Exercise Notice and Aggregate Exercise Price referred to in clause (i) or (ii) above the holder of this
Warrant shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this
Warrant has been exercised. In the case of a dispute as to the determination of the Warrant Exercise Price, the Closing Bid Price or the
arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the holder the number of Warrant Shares that is not
disputed and shall submit the disputed determinations or arithmetic calculations to the holder via facsimile within one (1) Business
Day of receipt of the holder’s Exercise Notice.
(c) Principal
Market Limitation. Notwithstanding anything in this Warrant to the contrary, the Company shall not issue any shares of Common Stock
pursuant to the terms of this Warrant if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common
Stock that the Company may in connection with any transaction aggregated with this Warrant in compliance with the Company’s obligations
under the rules or regulations of Nasdaq Stock Market (such amount of shares shall be referred to as the “Exchange Cap”),
except that such limitation shall not apply in the event that the Company (A) obtains the approval of its stockholders as required
by the applicable rules of the Nasdaq Stock Market for issuances of shares of Common Stock in excess of such amount or (B) obtains
a written opinion from outside counsel to the Company that such approval is not required, which opinion shall be reasonably satisfactory
to the Holder.
(d) If
the holder and the Company are unable to agree upon the determination of the Warrant Exercise Price or arithmetic calculation of the Warrant
Shares within one (1) day of such disputed determination or arithmetic calculation being submitted to the holder, then the Company
shall immediately submit via facsimile (i) the disputed determination of the Warrant Exercise Price or the Closing Bid Price to an
independent, reputable investment banking firm or (ii) the disputed arithmetic calculation of the Warrant Shares to its independent,
outside accountant. The Company shall cause the investment banking firm or the accountant, as the case may be, to perform the determinations
or calculations and notify the Company and the holder of the results no later than forty-eight (48) hours from the time it receives the
disputed determinations or calculations. Such investment banking firm’s or accountant’s determination or calculation, as the
case may be, shall be deemed conclusive absent manifest error.
(e) Unless
the rights represented by this Warrant shall have expired or shall have been fully exercised, the Company shall, as soon as practicable
and in no event later than five (5) Business Days after any exercise and at its own expense, issue a new Warrant identical in all
respects to this Warrant exercised except it shall represent rights to purchase the number of Warrant Shares purchasable immediately prior
to such exercise under this Warrant exercised, less the number of Warrant Shares with respect to which such Warrant is exercised.
(f) No
fractional Warrant Shares are to be issued upon any pro rata exercise of this Warrant, but rather the number of Warrant Shares issued
upon such exercise of this Warrant shall be rounded up or down to the nearest whole number.
(g) If
the Company or its Transfer Agent shall fail for any reason or for no reason to issue to the holder within ten (10) days of
receipt of the Exercise Delivery Documents, a certificate for the number of Warrant Shares to which the holder is entitled or to credit
the holder’s balance account with The Depository Trust Company for such number of Warrant Shares to which the holder is entitled
upon the holder’s exercise of this Warrant, the Company shall, in addition to any other remedies under this Warrant, have any other
remedies otherwise available to such holder.
(h) If
within ten (10) days after the Company’s receipt of the Exercise Delivery Documents, the Company fails to deliver a new Warrant
to the holder for the number of Warrant Shares to which such holder is entitled pursuant to Section 2 hereof, then, in addition to
any other available remedies under this Warrant, have any other remedies otherwise available to such holder.
Section 3. Covenants
as to Common Stock. The Company hereby covenants and agrees as follows:
(a) This
Warrant is, and any Warrants issued in substitution for or replacement of this Warrant will upon issuance be, duly authorized and validly
issued.
(b) All
Warrant Shares which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.
(c) Insufficient
Authorized Shares. At any time while this Warrant remains outstanding, if the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of this Warrant at least a number
shares of Common Stock equal to 100% of the number shares of Common Stock as shall from time to time be necessary to effect the exercise
of all of this Warrant then outstanding without regard to any limitation on exercise included herein (the “Required Reserve Amount”)
then the Company shall immediately take all action necessary to increase the Company's authorized shares of Common Stock to an amount
sufficient to allow the Company to reserve the Required Reserve Amount for this Warrant then outstanding.
(d) If
at any time after the date hereof the Company shall file a registration statement (other than a registration statement on Form S-4,
S-8 or for which the underwriter for such offering refuses in writing to include the Warrant Shares), the Company shall include the Warrant
Shares issuable to the holder, pursuant to the terms of this Warrant and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all Warrant Shares from time to time issuable upon the exercise of this Warrant; and the Company shall so
list on each national securities exchange or automated quotation system, as the case may be, and shall maintain such listing of, any other
shares of capital stock of the Company issuable upon the exercise of this Warrant if and so long as any shares of the same class shall
be listed on such national securities exchange or automated quotation system.
(e) The
Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action (it being understood that filing a Certificate of Designation
or implementing a reverse split are not intended to be included in this provision), avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed by it hereunder, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such action as may reasonably be requested by the holder of this Warrant in order
to protect the exercise privilege of the holder of this Warrant against dilution or other impairment, consistent with the tenor and purpose
of this Warrant. The Company will not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant
above the Warrant Exercise Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
(f) This
Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all
of the Company’s assets.
Section 4. Taxes.
The Company shall pay any and all taxes, except any applicable withholding, which may be payable with respect to the issuance and delivery
of Warrant Shares upon exercise of this Warrant.
Section 5. Warrant
Holder Not Deemed a Stockholder. Except as otherwise specifically provided herein, no holder, as such, of this Warrant shall be entitled
to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained
in this Warrant be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right
to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance
to the holder of this Warrant of the Warrant Shares which he or she is then entitled to receive upon the due exercise of this Warrant.
In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on such holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 5, the Company will provide the holder of this Warrant with copies of
the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to
the stockholders.
Section 6. Representations
of Holder. The holder of this Warrant, by the acceptance hereof, represents that it is acquiring this Warrant and the Warrant Shares
for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution
of this Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act; provided, however, that
by making the representations herein, the holder does not agree to hold this Warrant or any of the Warrant Shares for any minimum or other
specific term and reserves the right to dispose of this Warrant and the Warrant Shares at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act. The holder of this Warrant further represents, by acceptance hereof,
that, as of this date, such holder is an “accredited investor” as such term is defined in Rule 501(a)(1) of Regulation
D promulgated by the Securities and Exchange Commission under the Securities Act (an “Accredited Investor”). Upon exercise
of this Warrant the holder shall, if requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant
Shares so purchased are being acquired solely for the holder’s own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that such holder is an Accredited Investor. If such holder cannot make such representations
because they would be factually incorrect, it shall be a condition to such holder’s exercise of this Warrant that the Company receive
such other representations as the Company considers reasonably necessary to assure the Company that the issuance of its securities upon
exercise of this Warrant shall not violate any United States or state securities laws.
Section 7. Ownership
and Transfer. The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which the Company shall record the name and address of the
person in whose name this Warrant has been issued, as well as the name and address of each transferee. The Company may treat the person
in whose name any Warrant is registered on the register as the owner and holder thereof for all purposes, notwithstanding any notice to
the contrary, but in all events recognizing any transfers made in accordance with the terms of this Warrant.
Section 8. Adjustment
of Warrant Exercise Price and Number of Shares. The Warrant Exercise Price and the number of shares of Common Stock issuable upon
exercise of this Warrant shall be adjusted from time to time as follows:
(a) Adjustment
of Warrant Exercise Price upon Subdivision or Combination of Common Stock. If the Company at any time after the date of issuance of
this Warrant subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares
of Common Stock into a greater number of shares, any Warrant Exercise Price in effect immediately prior to such subdivision will be proportionately
reduced and the number of shares of Common Stock obtainable upon exercise of this Warrant will be proportionately increased. If the Company
at any time after the date of issuance of this Warrant combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, any Warrant Exercise Price in effect immediately prior to such
combination will be proportionately increased and the number of Warrant Shares issuable upon exercise of this Warrant will be proportionately
decreased. Any adjustment under this Section 8(a) shall become effective at the close of business on the date the subdivision
or combination becomes effective.
(b) Distribution
of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets)
to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction)
(a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:
(i) any
Warrant Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders
of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a
price determined by multiplying such Warrant Exercise Price by a fraction of which (A) the numerator shall be the Closing Sale Price
of the Common Stock on the trading day immediately preceding such record date minus the value of the Distribution (as determined in good
faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (B) the denominator shall be the Closing
Sale Price of the Common Stock on the trading day immediately preceding such record date; and
(ii) either
(A) the number of Warrant Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number
of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders
of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding
clause (i), or (B) in the event that the Distribution is of common stock of a company whose common stock is traded on a national
securities exchange or a national automated quotation system, then the holder of this Warrant shall receive an additional warrant to purchase
Common Stock, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the amount
of the assets that would have been payable to the holder of this Warrant pursuant to the Distribution had the holder exercised this Warrant
immediately prior to such record date and with an exercise price equal to the amount by which the exercise price of this Warrant was decreased
with respect to the Distribution pursuant to the terms of the immediately preceding clause (i).
(c) Certain
Events. If any event occurs of the type contemplated by the provisions of this Section 8 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity
features other than to employees, officers, directors or consultants as compensation), then the Company’s Board of Directors will
make an appropriate adjustment in the Warrant Exercise Price and the number of shares of Common Stock obtainable upon exercise of this
Warrant so as to protect the rights of the holders of the Warrants; provided, except as set forth in Section 8(a), that no such adjustment
pursuant to this Section 8(c) will increase the Warrant Exercise Price or decrease the number of shares of Common Stock obtainable
as otherwise determined pursuant to this Section 8.
(d) Notices.
(i) Immediately
upon any adjustment of the Warrant Exercise Price, the Company will give written notice thereof to the holder of this Warrant, setting
forth in reasonable detail, and certifying, the calculation of such adjustment.
(ii) The
Company will give written notice to the holder of this Warrant at least ten (10) days prior to the date on which the Company closes
its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any
pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Organic Change (as
defined below), dissolution or liquidation, provided that such information shall be made known to the public prior to or in conjunction
with such notice being provided to such holder.
(iii) The
Company will also give written notice to the holder of this Warrant at least ten (10) days prior to the date on which any Organic
Change, dissolution or liquidation will take place, provided that such information shall be made known to the public prior to or in conjunction
with such notice being provided to such holder.
Section 9. Purchase
Rights; Reorganization, Reclassification, Consolidation, Merger or Sale.
(a) In
addition to any adjustments pursuant to Section 8 above, if at any time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock
(the “Purchase Rights”), then the holder of this Warrant will be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant,
issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are
to be determined for the grant, issue or sale of such Purchase Rights. In the event the holder of this Warrant does not exercise any part
of this Warrant, the Purchase Rights allocable to such unexercised portion of the Warrant shall be automatically canceled.
(b) Any
recapitalization, reorganization, reclassification, consolidation, merger, sale of all or substantially all of the Company’s assets
to another Person or other transaction in each case which is effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock is referred
to herein as an “Organic Change.” Prior to the consummation of any (i) sale of all or substantially all of the
Company’s assets to an acquiring Person or (ii) other Organic Change following which the Company is not a surviving entity,
the Company will secure from the Person purchasing such assets or the successor resulting from such Organic Change (in each case, the
“Acquiring Entity”) a written agreement (in form and substance reasonably satisfactory to the holders of Warrants representing
at least two-thirds of the Warrant Shares issuable upon exercise of the Warrants then outstanding) to deliver to each holder of Warrants
in exchange for such Warrants, a security of the Acquiring Entity evidenced by a written instrument substantially similar in form and
substance to this Warrant and reasonably satisfactory to the holders of the Warrants (including an adjusted warrant exercise price equal
to the value for the Common Stock reflected by the terms of such consolidation, merger or sale, and exercisable for a corresponding number
of shares of Common Stock acquirable and receivable upon exercise of the Warrants without regard to any limitations on exercise, if the
value so reflected is less than any Applicable Warrant Exercise Price immediately prior to such consolidation, merger or sale). Prior
to the consummation of any other Organic Change, the Company shall make appropriate provision (in form and substance reasonably satisfactory
to the holders of Warrants representing a majority of the Warrant Shares issuable upon exercise of the Warrants then outstanding) to insure
that each of the holders of the Warrants will thereafter have the right to acquire and receive in lieu of or in addition to (as the case
may be) the Warrant Shares immediately theretofore issuable and receivable upon the exercise of such holder’s Warrants (without
regard to any limitations on exercise), such shares of stock, securities or assets that would have been issued or payable in such Organic
Change with respect to or in exchange for the number of Warrant Shares which would have been issuable and receivable upon the exercise
of such holder’s Warrant as of the date of such Organic Change (without taking into account any limitations or restrictions on the
exercisability of this Warrant).
Section 10. Lost,
Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt
of an indemnification undertaking (or, in the case of a mutilated Warrant, the Warrant), issue a new Warrant of like denomination and
tenor as this Warrant so lost, stolen, mutilated or destroyed.
Section 11. Notice.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of receipt is received by the sending party transmission is mechanically or electronically generated and kept on
file by the sending party); or (iii) one Business Day after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:
If to Holder: |
YA II PN, Ltd. |
|
c/o Yorkville Advisors Global, LP
1012 Springfield Avenue |
|
Mountainside, NJ 07092 |
|
Attention: |
[*****] |
|
Telephone: |
[*****]
|
|
Email: |
[*****] |
|
|
With Copy to: |
[*****] |
|
1012 Springfield Avenue |
|
Mountainside, NJ 07092 |
|
Telephone: |
[*****] |
|
Email: |
[*****] |
|
|
|
|
If to the Company, to: |
Canoo Inc. |
|
15520 Highway 114 |
|
Justin, TX 76247 |
|
Attention: |
[*****]; [*****] |
|
Email: |
[*****] |
If to a holder of this Warrant, to it at the address
and facsimile number set forth on Exhibit C hereto, with copies to such holder’s representatives as set forth on Exhibit C,
or at such other address and facsimile as shall be delivered to the Company upon the issuance or transfer of this Warrant. Each party
shall provide five days’ prior written notice to the other party of any change in address or facsimile number. Written confirmation
of receipt (A) given by the recipient of such notice, consent, facsimile, waiver or other communication, (or (B) provided by
a nationally recognized overnight delivery service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from
a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
Section 12. Date.
The date of this Warrant is set forth on page 1 hereof. This Warrant, in all events, shall be wholly-void and of no effect after
the close of business on the Expiration Date.
Section 13. Amendment
and Waiver. Except as otherwise provided herein, the provisions of the Warrants may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent
of the holders of Warrants representing at least two-thirds of the Warrant Shares issuable upon exercise of the Warrants then outstanding;
provided that, except for Section 8(a), no such action may increase the Warrant Exercise Price or decrease the number of shares or
class of stock obtainable upon exercise of any Warrant without the written consent of the holder of such Warrant.
Section 14. Descriptive
Headings; Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. The corporate laws of the State of Delaware shall govern all issues concerning the
relative rights of the Company and its stockholders. All other questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in Union County and the United States District Court for the District of New York, for the adjudication of
any dispute hereunder or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction
of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Section 15. Waiver
of Jury Trial. AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH
THIS TRANSACTION.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF,
the Company has caused this Warrant to be signed as of the date first set forth above.
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CANOO INC. |
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By: |
|
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Name: |
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Title: |
EXHIBIT A TO WARRANT
EXERCISE NOTICE
TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
CANOO INC.
The undersigned holder hereby
exercises the right to purchase ______________ of the shares of Common Stock (“Warrant Shares”) of CANOO INC.
(the “Company”), evidenced by the attached Warrant (the “Warrant”). Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the Warrant.
Specify Method of exercise by check mark:
1.
___ Cash Exercise
(a) Payment of Warrant Exercise
Price. The holder shall pay the Aggregate Exercise Price of $______________ to the Company in accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares.
The Company shall deliver to the holder _________ Warrant Shares in accordance with the terms of the Warrant.
2.
___ Cashless Exercise
(a) Payment of Warrant Exercise
Price. In lieu of making payment of the Aggregate Exercise Price, the holder elects to receive upon such exercise the Net Number of
shares of Common Stock determined in accordance with the terms of the Warrant.
(b) Delivery of Warrant Shares.
The Company shall deliver to the holder _________ Warrant Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
Name of Registered Holder
EXHIBIT B TO WARRANT
FORM OF WARRANT POWER
FOR VALUE RECEIVED,
the undersigned does hereby assign and transfer to ________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Canoo Inc. represented by warrant certificate no. _____, standing in the name of the
undersigned on the books of said corporation. The undersigned does hereby irrevocably constitute and appoint ______________, attorney
to transfer the warrants of said corporation, with full power of substitution in the premises.
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